Tuesday, June 12, 2012

New Phone Plan From Verizon

There are now new decisions to make.

Verizon is starting a new phone/data plan on June 28th.  It is called the "Share Everything Plan."  Actually it is really "plans" since you will choose the amount of data to use at a specific cost.

You can keep your old plan up until you decide to upgrade your phone if your upgrade is at the subsidized rate.  If you want to pay full retail, they will let you keep your old plan.

As if you really have a choice.  Would you rather pay the discounted price for a new IPhone which is your 2 year contract price, or $649 which is the retail cost to you if want to keep your old plan.

You do the math.  We really will not have a choice but to go on the new plan when we upgrade.  The fact that more people are using Data vs Phone Calls is one reason for the change. Money is to be made.

What is most important in the new format is that the plans will now have unlimited voice and messaging services, but data will be offered in packages.  Encouraging use of data, which will now encompass the ability to add other devices such as an IPAD, will increase data usage so that we can spend more.  Before we had unlimited data usage. Now you will also have a fee for each device added to your plan.

I called Verizon to see how this new plan will work in the current "Family Plan" where you can have up to 4 additional phones on one account.  You now will be paying $40 per phone number in your family plan for unlimited calling and messaging service and then have to share a gigabyte plan.  

AT&T will offer a similar plan.

Here is the article from the Wall Street Journal:

Verizon Wireless lifted the curtain on its long-awaited shared-data plans that allow users to put additional devices under one contract, representing a major shift in how consumers pay for wireless service.
Verizon Wireless lifted the curtain on its long-awaited shared-data plans that allow users to put additional devices under one umbrella. Thomas Gryta reports on digits. Photo: Getty Images.
The plans will provide unlimited voice and messaging services, while also offering a block of data for a flat cost, plus a fee for each device that will draw on that data. The new pricing structure shifts the focus to data usage and diminishes the role of voice minutes and texts, once the basis for most wireless bills.
The plans also encourage increased data use by making it easier to add devices, such as tablets. The move is an example of carriers providing buckets of data that can be used for multiple products and further transitioning away from prior plans that once offered data on an unlimited basis.
"We view this as a very positive move for [Verizon Communications]. The main benefit is to stimulate device adoption and usage on its LTE network," Wells Fargo analyst Jennifer Fritzsche wrote in a note, referring to Long Term Evolution, the name of the technology that Verizon is using for its 4G network.
Sanford Bernstein analyst Craig Moffett called the new plan structure "the most profound change to pricing in the telecom industry has seen in 20 years."
"In the high-fixed-cost world of telecom, pricing is the foundation of strategy," Mr. Moffett wrote in a research note.
Associated Press
An Apple iPhone 4S at a Verizon store in Ohio. Verizon on Tuesday announced new plans that allow multiple devices under one umbrella.
Rival AT&T Inc. also has eliminated unlimited data plans for new customers and is expected to offer a similar plan that draws from one bucket of data. Existing customers with unlimited data can continue using their plans, while Verizon has been more aggressive in encouraging a switch to newer plans.
Sprint Nextel Corp. continues to offer unlimited data for customers on its network. T-Mobile offers an unlimited plan, but throttles, or slows, users when they cross a certain usage threshold. T-Mobile also has questioned the usefulness of multiple consumers drawing from one data bucket.
The switch to unlimited voice comes as the carriers are seeing their users talk less and less, leading them to downgrade their spending on a service that is traditionally lucrative. Part of this has been driven by increased texting and other forms of data-based interaction, rather than the traditional phone call.
Meanwhile, data usage is rising, and carriers have moved to tiered plans in recent years to better monetize the trend. AT&T was the first to move away from unlimited data in 2010 when it began charging for a pre-set amount of monthly data usage with the biggest consumers being forced to shell out for their megabytes.
Last year, data accounted for 37% of carriers' $169.8 billion in wireless revenue last year, compared with 12% in 2006.
Stifel Nicolaus analyst Christopher King expects total wireless service revenue at Verizon Wireless to rise from the plans. He noted that subscribers may also be less likely to switch carriers, although he does expect other providers to offer similar data-centric pricing models.
An AT&T spokesman declined to comment on the timing of its own plan.
Verizon Wireless will launch the "Share Everything Plans" on June 28. They will allow users to cover up to 10 devices under one contract. Existing customers can remain on their current plans, but new subscribers will have to choose a shared plan.
The data plans begin at $50 a month for 1 gigabyte of data and range up to 10 gigabytes for $100 a month. The monthly device fees are $40 for smartphones, $30 for basic phones, $20 for laptops and $10 for tablets.
There is no additional charge to turn applicable devices into a Mobile Hotspot.
Users will get text message warnings as their data is consumed in the month, and can increase their allotment without extending their contract. There will be no fee or contract extension for current subscribers to move to the new plans.
Verizon Wireless currently offers a 2-gigabyte data plan for $30 monthly, and 5 gigabytes for $50 monthly.
Based on the current plan, a customer with 450 minutes of voice, 2 gigabytes of data and unlimited messages would pay $90. Under the new plan, a basic customer with one smartphone and the lowest data plan of 1 gigabyte also will pay $90 a month. In that example, the amount is the same, but the customer will have access to less data but will have unlimited voice and the ability to make the device a hotspot.
Some of Verizon's customers still remain on unlimited data because they never changed their plans. After June 28, such customers cannot keep those plans if they want to upgrade their device with a subsidized one.
If they choose to pay full retail price for a new phone, usually hundreds of dollars more, then customers can keep their unlimited plan. For example, a 16-gigabyte iPhone 4S from Apple has a retail price of $649.
—Greg Bensinger contributed to this article.
Write to Thomas Gryta at Thomas.Gryta@dowjones.com

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