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Verizon Wireless Sees End To Unlimited-Data Plans On New Network

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05/16/2012 | 11:51pm CET
   By Greg Bensinger 
   Of  
 

Verizon Wireless is chipping away at unlimited data.

The carrier said Wednesday that it will no longer allow customers to keep their grandfathered unlimited-data plans when they upgrade to its high-speed mobile broadband network known as 4G LTE.

The switch means millions of Verizon Wireless customers still on unlimited $30-per-month plans will have to shell out more money to stream video and download photos and music to their devices. In March, AT&T Inc. (>> AT&T Inc.) effectively ended its all-you-can-eat plans, saying it would slow download speeds to a near halt if unlimited users exceed monthly usage caps.

Facing a shortage of wireless airwaves amid rising demands on their networks, carriers have been seeking to squeeze more revenue out of their existing customers, such as by introducing more advanced devices and penalties for exceeding limits on tiered data plans.

A Verizon Wireless executive said Wednesday that customers with unlimited-data plans who upgrade will be forced to sign up for a new data-sharing plan that allows people to use multiple mobile devices on one of several data plans Verizon Wireless will disclose this summer. Ultimately, the company hopes to move everyone off unlimited plans, said Fran Shammo, finance chief of Verizon Communications Inc. (>> Verizon Communications Inc.), parent of the wireless venture.

"You will have to go to onto the data-share plan and moving away from, if you will, the unlimited world," said Shammo at an investor conference. As customers adopt increasingly data-rich plans, "you'll see the revenue increase there."

Under the tiered pricing plans, Verizon Wireless customers would get two gigabytes of data monthly--a little more than five hours of streaming video--for $30. The company also has plans for five gigabytes for $50 and 10 gigabytes for $80, with each extra gigabyte costing $10 per month.

Verizon took an early lead in rolling out 4G LTE, which promises speeds up to 10 times faster than 3G networks, and has been pushing customers to upgrade because it is a more-efficient service. However, with the popular Apple Inc. (>> Apple Inc.) iPhone operating only on 3G networks, just 9% of Verizon's contract customers--roughly eight million--have made the switch.

As a further inducement, the carrier has said it will introduce smartphones this year that are compatible only with 4G LTE networks. Shammo didn't provide details of the new data-plan pricing.

It wasn't clear when the change would take effect, and a Verizon Wireless spokeswoman declined to comment beyond Shammo's remarks. Verizon Wireless risks driving some users to Sprint Nextel Corp. (S), the third-largest U.S. carrier, which still offers unlimited plans to new customers and which will launch its first 4G LTE markets by mid-year. AT&T currently allows users to keep their unlimited data plans when they upgrade to 4G LTE.

AT&T was the first to introduce tiered data pricing in 2010, a move to help manage mushrooming traffic on its network, with Verizon Wireless following suit last summer. Verizon Wireless has been limiting download speeds for the top 5% of users in areas where cell sites are congested.

Shammo's comments suggested users who keep 3G-only devices may be able keep their unlimited plans.

-By Greg Bensinger, Dow Jones Newswires; 212-416-4676; [email protected]

Stocks mentioned in the article : AT&T Inc., Apple Inc., Verizon Communications Inc.
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Financials ($)
Sales 2018 160 B
EBIT 2018 30 800 M
Net income 2018 17 375 M
Debt 2018 107 B
Yield 2018 5,42%
P/E ratio 2018 13,17
P/E ratio 2019 12,90
EV / Sales 2018 2,08x
EV / Sales 2019 2,04x
Capitalization 227 B
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Average target price 40,7 $
Spread / Average Target 9,9%
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NameTitle
Randall L. Stephenson Chairman, President & Chief Executive Officer
John J. Stephens Chief Financial & Principal Accounting Officer
Joyce M. Roché Independent Director
Laura D'Andrea Tyson Independent Director
Matthew K. Rose Lead Independent Director
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