Verizon Wireless, the largest U.S. mobile-phone carrier, seems likely to follow AT&T in eliminating unlimited data plans and introducing tiered pricing. Aside from seeking to improve profits, Verizon is working to keep its network running smoothly as more of its customers switch to smartphones and other wireless devices that consume more bandwidth compared to cell phones.
In a recent interview John Killian, chief financial officer of Verizon Communications said, “We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate.” While Verizon’s wireless network has not experienced network problems that have hurt AT&T, Killian stated that the company anticipates “explosions in data traffic” over wireless networks as new phones on 4G networks incorporate data- heavy applications, such as video downloads. Killian also said that Verizon believes that smartphone users, which currently make up about 17 percent of the carrier’s user base, will make up 70 percent to 80 percent of its base “over time.”
Verizon Wireless appears to be getting ready to introduce its new data price plans to coincide with the upcoming launch of its LTE network. It is also interesting to note that the timing of this development is close to new rumors reported by Business Week and Barclays that Verizon Wireless will be getting the Apple iPhone in January. This is significant because the average iPhone user consumes 10 times more bandwidth compared to other smartphone users.
If Verizon follows the approach of AT&T, the changes will only impact new contracts. Most users currently do not consume enough data to merit the cost of unlimited data plans. Verizon reports that its smartphone users typically use between 600 MB and 800 MB of data per month, which is similar data usage for what AT&T reported when it established tiered data pricing.
The average consumption that carriers report for their users may not match your employees’ consumption. Wireless Expense Management programs can provide important baseline information to look at current spending and consumption for employees. In cases where employees are on unlimited data plans determining the actual consumption for data may be difficult because many carriers do not readily report this information on bills. The next step is to review the types of devices that employees use. Blackberries are much more efficient in terms of the amount of data and bandwidth that they consume. In addition, organizations need to consider plans to deploy mobile applications to their employees in the future.
The most important advice that we can provide is to use data from your employees to make an informed decision. Do not rely on averages reported by the carriers. Wireless carriers are betting that they can make more money by switching subscribers to tiered data plans. The worst case would be one in which you pay extra for unlimited plans now when you don’t need them and you end up with a tiered data plan in the future when you do need an unlimited data plan. The key to avoiding this is to get all the facts. Inaction is likely to cost you now and in the future because tiered data plans appear to be coming.
