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Verizon Wireless is keeping its unlimited data plans when it announces the new Verizon iPhone, The Wall Street Journal reported today.
Verizon is expected to unveil the long-awaited Verizon iPhone tomorrow at a media event in New York City. The carrier sent invitations to the press on Friday.
The Wall Street Journal cites one unnamed source on the news that the company plans to keep its $30-a-month unlimited data plan. Verizon rival AT&T, which has been the exclusive carrier in the U.S. for the iPhone since it launched in 2007, eliminated its unlimited data plan in June.
Since the iPhone launched, AT&T has struggled to keep up with demand for the data on its network. And the carrier has admitted that it underestimated capacity requirements to keep up with demand for the iPhone and other smartphones.
The strains put on the network have affected performance. And in December AT&T was rated the worst carrier in terms of customer satisfaction, according to a survey by Consumer Reports. A large number of consumers surveyed were iPhone users.
The company says it’s been upgrading its network to keep up with demand. It’s added fiber backhaul and has upgraded cell sites to accommodate heavier usage. To help curb usage, in June the company also put caps on its data plans, offering a $25 a month plan that offers 2GB of data and a $15 a month plan that offers 200MB of data per month.
Most experts agree that usage-based billing is necessary as more consumers move toward data-intensive smartphones. But consumers don’t like the idea. So far none of AT&T’s rivals have followed AT&T’s lead.
Verizon executives have talked about moving toward a tiered pricing model. But executives have acknowledged that an unlimited offering may still have a place in Verizon’s offering.
Last week at the Consumer Electronics Show in Las Vegas, Verizon announced 10 new devices for its 4G LTE network. The company didn’t announce pricing details for the new service, but Verizon Wireless CEO Daniel Mead told the audience that Verizon expects to keep its existing pricing model initially when it launches the new devices. But Mead said the company is still open to evaluating pricing plans and making changes.
During an interviewat the show last week with CNET, Tony Melone , the company’s CTO, elaborated:
“The technology we are using for the network gives us more tools to play with and the tools we have today may be different from the tools we have in six months. So that allows us to be more creative in how we structure our data plans. And whether we choose to use those tools to change our plans is really up to the marketing folks. But it’s possible that we could stick with the status quo for a while.”
What does this mean for consumers? If in fact, Verizon sticks with its unlimited data plan, it will be good news for consumers, especially heavy data users. Even though most consumers do not exceed AT&T’s 2GB cap, people are conditioned to expect unlimited data.
Analyst Craig Moffett of Sanford Bernstein said he thinks that keeping the unlimited data plan will help Verizon attract even more subscribers to its network. And he also said that such a move could pressure AT&T to reinstitute its unlimited plan.
“By sticking with the unlimited model, Verizon will undoubtedly gain even more subscribers,” he said in an e-mail. “But they will also perpetuate the expectation that data is ‘free,’ and will make it even harder for AT&T to remain capped…For heavy users, Verizon’s decision to remain unlimited is good news. For investors in the wireless sector, not so much.”
Verizon’s decision to keep an unlimited data plan and to attract as many iPhone subscribers to its network as it can is a testament to the confidence the company has in its network. During CNET’s interview with Melone last week, he said the carrier’s network is ready for the iPhone as well as any other data-hungry device that comes to its network.
“I feel very confident about our 3G and 4G networks,” he said. “We have seen tremendous growth over the past 18 months on our network with the Android devices and other smartphones. We are adding more capacity to the 3G network in 2011 to meet whatever demands customers put on us.”
But the demands that the new iPhone could put on Verizon’s network are pretty hefty. Some analysts are predicting that Apple will nearly double sales of the iPhone in the U.S. this year simply by adding Verizon as a carrier.
Some Wall Street analysts predict that Verizon will sell between 9 million and 12 million iPhones this year. AT&T sold about 11.1 million in the first nine months of 2010, and it’s expected to finish the year with about 14 million iPhones sold.
