Verizon Wireless is forging ahead with plans to change how it prices mobile broadband data, but isn’t yet sharing the details. Speaking at an investor conference today, company CEO Ivan Seidenberg said that consumers can expect new plans within four to six months as the company begins to offer its faster 4G service, known as LTE. Rival carrier AT&T has already eliminated unlimited data plans for new customers with tiered pricing of its own, but according to the Wall Street Journal, Seidenberg says Verizon isn’t yet sure that agrees with the way AT&T “valued the data” for such plans.
Seidenberg’s broad statements indicate that Verizon’s data pricing is likely to differ from that of AT&T. Indeed, although was the first U.S. carrier to talk about offering plans with limited bandwidth amounts, AT&T was the first to do so. In June, AT&T began offering cheaper 200 MB and 2 GB plans in lieu of unlimited data. Not being first to the punch could be advantageous for Verizon, as it studies how consumers react to AT&T’s limited plans. That research could lead to a number of different pricing models for Verizon, many of which Stacey covered last year in a GigaOM Pro study of metered mobile data (subscription required).
Verizon could follow AT&T’s lead by offering set packages of data, otherwise known as a tiered pricing model. Customers would choose a plan that best fits their needs in this scenario. AT&T says that 65 percent of its smartphone users use 200 MB or less each month on the 3G network, and 98 percent use under 2 GB, but Verizon hasn’t offered any similar research. As a result, it’s difficult to say what tiers Verizon could offer. Verizon could mix up the model a bit once it begins offering LTE service and the 5 – 12 Mbps download speeds the new technology will bring. Perhaps in lieu of a small or large amount of data, customers could purchase a set amount, and pay more or less depending on what speeds that amount is delivered at. For example, instead of the option of buying 2 GB per month for $25, customers have the option to buy 2 GB at speeds of 1 Mbps for $10 or 2 GB per month delivered at speeds of 5 Mbps for $30. Until AT&T upgrades its entire network to faster HSPA+ or LTE services, it has less opportunity for this type of service plan.
Another option could be based on congestion pricing, much like peak and off-peak utility rates. During hours when more people are using Verizon’s network, customers would be expected to pay more. Conversely, when fewer people are using the mobile broadband service, costs would decrease. Such pricing can act as an incentive for customers to use the mobile web for bandwidth intensive activities during the off-peak times, which allow Verizon to maintain high levels of service during the peak times.
Bandwidth caps are a third option and, to some degree, are already in place for current customers. Purchasing an unlimited 3G plan today isn’t actually unlimited; there’s a 5 GB data cap per month that customers can bump up against and face additional costs. T-Mobile also has a 5 GB cap, but instead of shutting off service or charging overages for additional data, the carrier retains the right to reduce data speeds after the 5 GB limit.
Verizon has plenty of pricing options to consider for its fast, new 4G network, but the one option that customers are least likely to see is the unlimited data plan that they most want.