Verizon Hints At Scrapping Unlimited Data Plans

BusinessWeek reports that Verizon may be preparing to follow AT&T's example by eliminating unlimited data plans later this year. Quoting: "'We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate,' John Killian, chief financial officer of Verizon Communications Inc., the wireless unit’s parent, said in an interview at Bloomberg’s headquarters in New York today. The company anticipates 'explosions in data traffic' over wireless networks as new phones on 4G networks incorporate data-heavy applications, such as video downloads, he said. Verizon is working to keep its network running smoothly as more of its customers switch to smartphones that connect to the Internet. ... 'The more bandwidth that you make available, the faster it will be consumed,' said Craig Moffett, analyst at Sanford C. Bernstein & Co. in New York. 'From Verizon’s perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that data is always going to be uncapped.'"

Comments

Why not raise the price instead?

[YA_Python_dev]

Why eliminate them completely, why simply not raise the price until it's profitable if some consumer want them?

Re:Why not raise the price instead?

[drinkypoo]

Why eliminate them completely, why simply not raise the price until it's profitable if some consumer want them?

That's what they're doing. It's called "charging by the minute" (or megabyte).

The simple truth is that if you sell an unlimited connection, some users will cost you far more than other users. Further, if you kicked all those users off your service tomorrow, you wouldn't lose that much money. And if you charged people the actual cost of unlimited service and then spent it on providing it, which includes actually building out new capacity, then you wouldn't be able to give your execs gigantic bonuses they don't deserve.

Re:Why not raise the price instead?

[westlake]

some users will cost you far more than other users. Further, if you kicked all those users off your service tomorrow, you wouldn't lose that much money

You might be making more money - with less investment in infrastructure.

if you charged people the actual cost of unlimited service and then spent it on providing it, which includes actually building out new capacity, then you wouldn't be able to give your execs gigantic bonuses they don't deserve.

This assumes there are enough customers willing to bear the real cost of providing "unlimited service" to make the investment worthwhile.

Re:Why not raise the price instead?

[Majik Sheff]

Who are you to decide what someone else deserves? Unless you are a voting shareholder you have no valid opinion on the matter.

Re:Why not raise the price instead?

[tsm_sf]

That's what they're doing. It's called "charging by the minute" (or megabyte).

It's spelled "charging by the minute" but it's pronounced "collusion".

Re:Why not raise the price instead?

[drinkypoo]

Who are you to decide what someone else deserves? Unless you are a voting shareholder you have no valid opinion on the matter.

I'm entitled to my opinion, and so are you.

Re:Why not raise the price instead?

[ChairmanMeow]

The ISP could charge a flat rate for everyone, and the power users who go over 250 GB can be charged 10c for each additional gigabyte.

Are you kidding? This is Verizon we're talking about. I'm currently have a phone with them (a cheap phone) and was recently looking into their data plans. Their non-"unlimited" plan is $10/month, and beyond a limit of 25 MB (not GB, MB) the price is $1/MB (again, not GB, MB). Somehow I think any new non-unlimited plan of theirs would be a lot more expensive than what you're thinking of.

Re:Why not raise the price instead?

[_KiTA_]

Why eliminate them completely, why simply not raise the price until it's profitable if some consumer want them?

Because they know in 5, 10 years their network will easily be able to handle any data usage -- presuming they can stop buying their execs yachts and cocaine -- even while the advent of stuff like streaming HD Netflix Movies will send data usage through the roof. By getting us weaned off unlimited data NOW, they will make much more money LATER when everyone is hitting a paltry 2 gig cap.

Whenever you have a pay-per-minute system, you eventually see it shift to a pay-per-month system, and the price drops. We've seen it in ISPs, MMORPGs, Long Distance, and Cellphones. In each case, the companies remain profitable, but no where near as much if they were able to keep the pay-per-minute scheme going. But market forces force the companies to give customers a pay-per-month system over X number of years, which seems to be where consumers are happy enough.

Data plans on cellphones are evolving to that point. The next step would be the price dropping like a rock, which is the "part 2" of the market forces mess above. The cellphone companies are (probably illegally, but it's the US, so whatever) conspiring to price fix their market by simply dropping the rates en mass so that customers can't just flee AT&T for Verizon or Sprint or whoever has a sane plan, since they're all dropping the plans.

But this isn't about money. At least, not short turn.

It's about forcibly preventing that evolution so they can ride the wave further on out. Their networks are woefully insufficient, data usage is going up at a rate only Raymond Kurzweil expected, and it's only the start of the exponential growth (helloooo iPad HD Netflix App)... But all of these pale in comparison to the hope that they can stop the evolution of their market. ... Because if they can get people used to the idea of $25/2GB data plans that sound ok now, but in 5 years would get you maybe a movie or 4 streamed before the obscene data charges kick in... $25 is going to look like chump change. Remember that these are the assholes who thought ahead far enough to make the web buttons, which load just enough on your data plans to cost you a few cents, stupidly easy to press. They make millions from it.

If they can get the average user -- or the average for their network -- to spend more than $6 a month in overage fees, this whole mess becomes hugely profitable for them. IF they can get it to $7, $10, or even $15, it's even better.

Re:Why not raise the price instead?

[dgatwood]

Which is nice, in theory. In practice, there are only two cell providers in the U.S.: AT&T and Verizon, and they're both doing this. If you live in a major city, you could use Sprint/Nextel or T-Mobile, but neither of them has the infrastructure to be a viable competitor to AT&T, much less Verizon.

And this is why I keep saying that widespread telecom infrastructure can feasibly be operated only by government-founded nonprofit orgs. As soon as you have for-profit companies providing the infrastructure for critical services, you end up with a market with insufficient competition to prevent abuse. If you want ubiquitous free-market competition in telecom services, you have to take the infrastructure out of the picture.

And lest you say that cell phones aren't critical services or that you can live without a cell phone, I would point out that most homeless people I've seen in California have cell phones. It's so essential to modern society that people choose a cell phone over a roof. And although cellular data is not in the same category right now, it's only a matter of time until it is (and cellular data can't exist without cellular voice anyway, making that a moot point).

The only alternative is extreme government regulation, and although this can help fix the worst of the monopoly/duopoly problems and increase coverage areas, it rarely results in any significant amount of true competition. We need a nationalized cellular tower service that leases nationwide tower services at a low cost, and we need it twenty years ago.

Re:Why not raise the price instead?

[Macrat]

Which is nice, in theory. In practice, there are only two cell providers in the U.S.: AT&T and Verizon, and they're both doing this. If you live in a major city, you could use Sprint/Nextel or T-Mobile, but neither of them has the infrastructure to be a viable competitor to AT&T, much less Verizon.

Sprint and T-Mobile can drop calls just as good as ATT/Verizon in major cities.

Re:Why not raise the price instead?

[Shakrai]

How about if I'm a "voting customer", who will happily take my money elsewhere if someone tries to screw me?

Am I the only one that refuses to pay $30-$45 a month for the privilege of having a "smart" phone? I look at from two different vantage points, A) I'm not paying [mega-corp] the same amount of money for 5GB as my unlimited cable modem connection costs, B) If the matter is truly important whomever needs to reach me can just call me.

I've set up numerous smart phones for co-workers of mine and I'm not convinced that they actually increase productivity. They are a neat toy for looking shit up on the go but Google SMS is sufficient to look up the information (weather, phone numbers, addresses) that I need most often.

Re:Why not raise the price instead?

[laughingcoyote]

Erm, that's the opposite of what I said. That may work in markets with low barriers to entry and large numbers of genuinely different competitors, but there are fewer and fewer of those. For the most part, barriers to entry are high, and most people have access to one giant quasi-monopoly, or maybe a few giant oligopolies. Regulation absolutely has its place there.

If you want to regulate in such a way that meaningful competition is allowed by lowering the entry barrier, such as mandatory linesharing at reasonable rates, I'm actually alright with that. In some cases, that may even be a better case than direct regulation of what the existing players may and may not do (though even then, there probably have to be some "lines in the sand").

But no, overall, it's not the "land of opportunity" for whoever says to themselves "All the cell companies suck. I'll go do better than all of them." I can't go do that, even if my idea really is superior to anything they're doing, because the barrier to entry in terms of initial cash required is so high. Can you?

Unlimited already means 5G

[wesw02]

Verizon's current unlimited plans aren't actually unlimited, they translate to 5G per month, if you exceed it you'll be fined. IMHO that's already a class action waiting to happen. This just sucks though, cell phone carriers charge more for internet and you are getting less of it.

Re:Unlimited already means 5G

[rolfwind]

They should really stop advertising "unlimited" in America. If there was an ounce of consumer protection in the government, they should hammer such terms as what it is, fraud.

Re:Unlimited already means 5G

[hedwards]

I think most people assume that unlimited means that it's as much as the device can use. I don't think anybody seriously believes that they're entitled to more than the full capacity of bandwidth use constantly over the month. That would be stupid. But, any constraints that the carrier places beyond what the device can handle is fraudulent in my view. If they want to call it unlimited, then they damn well better not be putting in any limits that the device itself doesn't require.

Re:Unlimited already means 5G

[internic]

I'm guessing part of the problem is that even if one carrier/ISP wanted to be honest and explain the limitations that they would really impose, their competitors won't do it, and as long as the average consumer is unwary they will opt in favor of the better sounding deal. I assume the reason this may be changing with mobile phone carriers is that enough users are starting to bump up against the hidden or unstated limits that the lie of "unlimited" service is no longer tenable.

No surprise

[name_already_taken]

This isn't really surprising.

Verizon has always seen their customers purely as a source of profit, and has done everything they can to maximize the fees they can charge customers - going as far as disabling bluetooth file exchange on their phones so customers have to send things like pictures via the Verizon network so they incur data charges.

Eliminating unlimited data plans is a logical step in maximizing profits.

Jjust admit you found another way to fuck us.

[Jackie_Chan_Fan]

Just admit you found another way to squeeze money out of your user base. Thats all this is really.

Its like text messaging. Everyone wants it, so lets charge everyone ridiculous rates to send text.

Now that everyone wants smart phones, lets charge everyone for data because we can.... and theres nothing you can do about it.

Re:Jjust admit you found another way to fuck us.

[massysett]

Its like text messaging. Everyone wants it, so lets charge everyone ridiculous rates to send text.

Now that everyone wants smart phones, lets charge everyone for data because we can.... and theres nothing you can do about it.

Boost Mobile. $50, text all you want, unlimited web.

Cricket. $40, text all you want, unlimited web.

So there is something you can do about it, but you'd rather sit around and whine. Or maybe you want the top notch devices and top notch network but you don't want to pay for it. Okay.

Re:Jjust admit you found another way to fuck us.

[Zak3056]

I never understood why people are WILLING to pay exorbitant amounts of money on stuff because they believe it is "premium".

Bad example, here--AT&T, Sprint, or VZW actually are "premium" services compared to Boost or Cricket. Just look at the coverage maps.

Re:Jjust admit you found another way to fuck us.

[tweak13]

News flash - use Boost CDMA and you are using Sprint

Bullshit.
Boost uses Sprint, but gets none of Sprint's roaming agreements with other providers. That's a HUGE change to coverage. Those roaming agreements are the only reason Sprint has good coverage. Take away the ability to use those Verizon towers and your only hope is that you are one of the lucky few that live within range of a Sprint tower.

The Lowest Common Denominator

[Enrique1218]

The only competition these guys do is seeing who can give their customers less. Forcing data plan, hiking early termination fees above the value of the phone, charging for text messaging, ring tones, and now limiting data plans. There is little difference between any of the wireless service providers in terms of what they provide. The cell phone lock in and multiyear contracts allow this to happen and stifle innovation. By getting a $600 smartphone for $200 with a multiyear contract, we lock ourselves to vendor and can't leave them when they cut service. Instead of developing the technology to meet the customer demand, they would rather trained their customers not to expect too much

Yet another excuse to charge more money

[Xpendable]

This is BS. This is nothing more than an excuse for Verizon to squeeze more money out of customers. I am getting frakked in the the a$$ by Com-Xfinitysucks-castic by ridiculuous price increases and equipment fees. I pay over $100 a month for 1.5 mb download and digital basic tv, and that's WITHOUT HD. If I want HD, I have to pay an additional $40 per month plus an upcharge on an HD box. Now Comcast just forced me to get these stupid DTA boxes which eliminate the ability to get any free HD channels and effectively eliminates the QAM channels I used to be able to pick up on my LCD HDTV. WIthout the DTA I can only watch 15 channels. And of course they only give you 2 "free" DTA's... if you have more TV's, you have to rent them for $2 a month. Nothing but a SCAM. I am cancelling Comcast. And when Verizon ends the unliminted data plan, I am cancelling Verizon. Seriously... I might as well forego internet all together. Frak these companies who make it so expensive to enjoy technology with their 400% upcharges on services.

Re:I'm so fucking tired of capitalism.

[speedlaw]

I had relatives on the "wrong" side of the wall. Things there didn't work out too well either.

Honest question

[Nikker]

I have never been involved in ISP grade networks and I pose a question to those more knowlegeable in the field. Have we hit the proverbial wall in terms of bandwidth? Is it possible (once last mile is satisifed) to have a somewhat reliable 1000mb low latency connection into every home or is this something that is limited not by finance but by some other principal? Lastly can any one provide an approximation where large ISP's are today in terms of backbone connections and maybe some hints of the major bottlenecks (aside from last mile) that is being encountered?

Of course they will

[nurb432]

Everyone else is doing it, so why wouldn't they? Just like the bad old days ( for those that remember it ).

I still think this was the intent all along. Make it 'free' long enough for people to start relying on having data available, introducing even more bandwidth hog services, then after it will be hard for most to back off, start charging "per use" again. They are no better then drug dealers, except they get away with it.

Phone companies wet dream

[hpa]

The monopoly telephone companies have always been obsessed with getting users to pay by the usage unit, even when flat pricing made them more money. It does seem to reflect their thinking more than profit maximization; one possibility is that they have a vastly exaggerated notion of the inadequacies of their own plant, or alternatively they are suffering from lottery-style thinking -- the executives have happy dreams about the poor sucker who left their phone connected and got a $10,000 bill.

In the USA, at least, flat-rate long distance did not become common until it got to be way too easy to bypass the monopolists.

Oh hell no, I can't leave that one alone

[Anonymous Coward]

No, it isn't sweet. You're getting the shorter end of the deal. If you enter into an agreement to extend their network service so they can profit from it, but you get nothing from it, then they are flat out screwing you. If you do get something out of it - either monetary compensation (which can be used to offset the expense of using their network) or service compensation (favored bandwidth status in return for providing more/better access to their network) then it is a real business deal. Remember, if it's a one-way deal, it's just one party giving a gift to another. If it's a two-way deal, then it's a business transaction.

Stop shilling for the goddamn telco monopolies.

Re:Oh hell no, I can't leave that one alone

[Anonymous Coward]

If you enter into an agreement to extend their network service so they can profit from it, but you get nothing from it, then they are flat out screwing you.

I agree. But I personally wouldn't enter into an agreement where I would "get nothing out of it".

I recommend no one enter into a zero-value agreement.

Re:SMS != data

[shawb]

SMS... incurs no cost at all to the operator

Not exactly true. Transmission to the tower is essentially free, but transmission of the data in the SMS packet across the network, and subsequent routing to the destination phone does cost the carriers money. Additionally, having SMS in the protocol means that bandwith is no longer free to add increased functionality or allow compression that would allow a tower to strip the dead space and allow communication with more phones.

But, yes, SMS is not carried over the 3G channel and so should not be incorporated into that billing. And while the per message cost of supporting SMS isn't that much... the actual total cost to a telecom is significant; I would almost suspect something on the order of millions of dollars annually. Although I will gladly acquiesce that claim if someone shows me actual internal figures.

Re:Consumers are getting mixed messages

[grumling]

For the most part, the cell companies in the US are pushing THEIR content, not general web content. Their content is cached at an on-network data center, formated to fit their bandwidth constraints (320X200 video, 4KHz mono audio), and in some cases, content providers paying for access.

Going off their formula to 720p YouTube isn't what they want you to do.

Re:Why is that "collusion"?

[Hognoxious]

Matching can occur in either direction.

Competitor lowers prices, so must you if you don't want to lose market share.

Competitor raises prices, so can you, and you're leaving money on the table if you don't.

It's only collusion if it's planned and orchestrated. Do you have any hard evidence of that?

your argument is flawed, they're unnecessary

[Chirs]

Homeless people have cell phones *because they don't have homes and so can't have land lines*. A phone is a lot cheaper than a roof, so your argument is spurious.

I've got 10yrs experience doing software development for a living. I don't have a cell phone. Heck, I don't have a laptop. There are times it would be convenient to have both, but it's not worth the money to me.

Re:Insensitive clods.

[cbiltcliffe]

Funny, the first thing I thought of when I saw that quote:

'From Verizon's perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that data is always going to be uncapped.'"

was this:

"From Verizon's perspective, the last thing you want is for another generation of consumers to be conditioned to the idea that they might actually get something in return for all the money they give us."

There. Fixed that for you.

Re:Insensitive clods.

[Bert64]

Data was always unlimited, or rather only limited by the speed of the connection...
There was nothing to stop you running your 300bps modem flat out 24/7, the problem is that end user connections have increased in speed faster than the carriers have invested in backbones to carry that data...

Re:Why is that "collusion"?

[mysidia]

Two companies out of the blue decide to suddenly impose a usage charge on a service that used to be free? (Bits of data transfer)

This is not 'price matching'; this is changing conditions of service to create mutually beneficial revenue opportunities for both companies.

And it has been coordinated, as the changes for both companies are announced in close time proximity.

Do you have a reasonably believable explanation for this other than collusion, planning, or orchestration?