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Verizon Wireless’ new unlimited data plan threatens to destroy everything, fear Wall Street analysts in an open panic attack over the prospects of value destruction and network reliability damage.
“An unlimited offer is dangerous,” Roger Entner, an analyst at Recon Analytics LLC, told Bloomberg News. “If they sign up a lot of people, it will congest the network, and they run the risk of people saying ‘the network sucks’.”
The return of unlimited data at Verizon (with a protective right to throttle customer speeds after they consume 22GB of data during the month) seems to have triggered anxiety on Wall Street because Verizon was the most adamant about never offering unlimited plans again after dropping them in July, 2011. Part of that fear may have come from Verizon’s own former chief financial officer Fran Shammo who warned investors last fall:
“The majority of people don’t need unlimited plans. But the people who use unlimited plans can be abusive, they can really wreak havoc to your network. And at the end of the day, I continue to say you cannot make money in an unlimited video world. You just can’t do it because you need to generate the cash flow to keep up with your demand.”
What also concerns Wall Street is the increasing evidence an all-out price war provoked by T-Mobile and Sprint will threaten to close some doors on network monetization. Charging customers for data consumption has a growth prospect that would have guaranteed increasing average revenue per customer indefinitely. But unlimited plans mean consumers pay one flat price for data no matter how much they consume. Consumers love it. Wall Street analysts generally don’t.
Other analysts are concerned that Verizon, deemed the Cadillac Network because of its premium price and reputation, also happens to have the least amount of deployed wireless spectrum of all the four national carriers. As the nation’s largest carrier with 114 million users, a big spike in data consumption could affect Verizon’s network performance, some speculate.
Unlimited data plans promote usage and total wireless traffic is expected to grow between 70-80% annually, up from 50-60% under today’s tiered data plans, according to wireless analyst Chetan Sharma.
In response Verizon has rushed out executives to reassure Wall Street and investors Verizon’s network was built to take it.
“Our goal is to always offer a better performance, and I see a path to that,” Mike Haberman, Verizon’s vice president of network support, said in an interview with Bloomberg:
“Spectrum is only one element of a network,” he added. “How you put the network together is far more important.” In advance of its decision to start selling an unlimited data package, Verizon was busy with upgrades. The company just boosted network capacity by 50 percent with new systems that take separate radio frequencies and combine them into one large pathway, Haberman said. The company has also been adding more cell sites and transmitters in cities and connecting those sites with high-capacity fiber-optic lines.
CNBC reported Verizon’s new unlimited data plan is a “sign of weakness” for Verizon, which is facing challenges to its core wireless business. (4:30)
Ten years earlier, Sprint was worth $69 billion and was prepared to dominate the U.S. wireless industry, but drove customers off with very poor customer service and inadequate investment in its network, allowing competitors like AT&T and Verizon Wireless to leap ahead. Sprint also embarked on an executive-inspired fantasy: a disastrous merger with Nextel that preoccupied the company for years. Softbank taking the lead has done little to change customer perceptions, nor those of some Wall Street analysts who fear Sprint is a bottomless money pit that always promises better times and profits are coming, but never seems to get there.
Son’s argument to the new administration depends on President Trump and FCC Chairman Ajit Pai being more friendly to the idea of less competition than the Obama Administration. Son may have an uphill battle, considering the former Obama Administration’s opposition to earlier mergers, including T-Mobile and AT&T and T-Mobile and Sprint seems to have paid off for consumers in the form of today’s fiercer competition and a price war.
New York State taxpayers will contribute $212 million to expand broadband to reach 89,514 homes and institutions in mostly in rural upstate communities that either lack internet access or have to endure very slow speed DSL service from the phone company. All recipients have agreed, as a condition of receiving the money, not to impose data caps on their customers.
A separate agreement with the New York State Public Service Commission obligates Charter Communications (formerly Time Warner Cable) to embark on its own company-funded expansion program to expand service to approximately 145,000 unserved and underserved premises. Charter has identified Columbia, Erie, Jefferson, Onondaga, Oswego, and Sullivan as “Year One Priority Counties” where most upgrades will be taking place in 2017, including expansion to reach 100Mbps speeds during the first six months of this year.
Google’s forthcoming online TV streaming service will cost too much for too little and includes a cloud-based DVR that will replace many of your recordings with unskippable-ad-laced alternatives.
Charter Communications is continuing to trim back its cable-TV lineup, this time with the 