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Summary:

Verizon Wireless apparently isn’t done talking about its controversial plan to phase out “grandfathered” unlimited data plans, issuing a statement Thursday explaining the new policy. What it boils down to is this: You can keep unlimited, but don’t expect Verizon to subsidize your device.

Verizon Wireless apparently isn’t done talking about its controversial plan to phase out “grandfathered” unlimited data plans for smartphone users. It issued a statement to The New York Times Thursday, detailing exactly how the policy would be implemented. What it boils down to is this: You can keep unlimited, but don’t expect Verizon to subsidize your device.

Here’s the full statement as published in the Gray Lady’s Bits blog:

  • Customers will not be automatically moved to new shared data plans. If a 3G or 4G smartphone customer is on an unlimited plan now and they do not want to change their plan, they will not have to do so.
  • When we introduce our new shared data plans, Unlimited Data will no longer be available to customers when purchasing handsets at discounted pricing.
  • Customers who purchase phones at full retail price and are on an unlimited smartphone data plan will be able to keep that plan.
  • The same pricing and policies will be applied to all 3G and 4GLTE smartphones.

What that means is that you can probably cling to your unlimited plan from now until the end of time, like some old codger that refuses to give up his party line. But Verizon isn’t going to make it easy on you. The people who like unlimited data tend to be the people who like high-end smartphones, and since Verizon will no longer cut them deals when they upgrade to newer and better devices, they’ll be on the hook for full sticker price. I’m not sure if you’ve seen the prices on a brand new unlocked iPhone lately, but they ain’t cheap: $650 to $850 depending on the model.

The odd thing is, depending on how they’re priced, Verizon’s new shared plans might actually wind up saving a lot of current unlimited customers money. For instance, if you’re in a household with two smartphones both grandfathered to unlimited, you’re basically paying $60 a month for data. If Verizon keeps its same pricing structure in place you could get 2 GB to share for half the monthly cost, plus whatever per line charges Verizon chooses to charge.

The larger majority of U.S. smartphone users consume less than 1 GB of data a month. There are still plenty of people who use their unlimited data plans to the hilt – many of them GigaOM readers – and they’re going to hate this policy change in the very cores of their beings. But my bet is that a lot of people currently on unlimited plans might benefit from switching over to shared data. We’ll have to see the details of Verizon’s shared pricing, though, before we can say for sure.

Buffet image courtesy of Flickr user Wesley Fryer

  1. So, they’re gonna’ reduce the monthly plan cost — to backout the portion that goes to pay down the subsidized phone. Right? :)

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    1. Kevin Fitchard Thursday, May 17, 2012

      Ha! I suspect you already know the answer to that one, HD.

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  2. i dont care if i have to pay full price on a smartphone. i have 3 smartphones my 2 daughters have a phone and i have one. they use there phone for everything. they txt 10,000 messages a month upload download music and apps and movies, watch netflix youtube. those phones are there life. if i got on a tierd plan its like there life has ended. what i do to keep my kids happy i will pay full price on a phone. i normally get me a new phone and pass my old phone to them. im paying right now 183.00 a month on my phone with Verizon and that includes 700 shared mins. the mobile hotspot i have to have cuz the kids got there laptops and tablets. and paying 4.99 for asurion insurance on each phone. im considered lucky to have my bill at 183.00 a month because i have an employee discount.

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  3. Roberto Olivares Thursday, May 17, 2012

    It is amazing how many people like the writer of the article don’t get it.
    The reason most of us with unlimited plans love them is because we don’t have to worry about overages.
    If this month I have to travel for awhile and kill time watching a lot of videos, I don’t have to worry about going over my data limit.
    I don’t have to worry about my kid going over the data cap and receiving a $300 bill for his line.
    Besides, as per your quote “…like some old codger that refuses to give up his party line.” Well that’s what Verizon is trying to force me to do.

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    1. Kevin Fitchard Thursday, May 17, 2012

      Hi Roberto,

      Don’t get me wrong. I understand the reasons why people want to keep unlimited, but it’s just not a sustainable business model and those plans are going away whether you like it or not.

      You’re right, Verizon is going to try to force you to move off unlimited. And it looks like it’s trying both a combination of the carrot and the stick. If you’re one of the small minority that really consumers 5 GB to 10 GB a month on a single smartphone, then by all means hold onto that plan. In your case, paying full price for new smartphones will save you money in the long run because you won’t be incurring those big monthly data bills. The point I’m making is that you’re really the exception, not the rule.

      But Verizon is going to make it increasingly difficult for you, either through throttling or through making it difficult for you to upgrade.

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      1. Wait… what? It’s not a sustainable business model? Unlimited data throttled at peak times is DRAMATICALLY more sustainable than limited data without throttle. I’m relatively certain there are about 10,000,000 articles on this exact topic.

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      2. Kevin Fitchard Friday, May 18, 2012

        Hi Nathan,

        Well, if throttled at peak times is your definition of unlimited, then you’re right it is sustainable at in the short term. But I think most unlimited users object to the idea of throttling and consider it carriers breaking their unlimited commitments.

        And even unlimited plus congestion-based throttling has a a half life. As the network becomes more congested, what is defined as peak becomes more and more expansive. You get a situation where half of Manhattan is subject to throttling policies from 6 AM to 8 PM. Finally, if operators aren’t collecting incremental revenues from more data use, they’ll have far less incentive to add incremental capacity upgrades to their networks. They’ll do enough to keep their tiered customers happy, but let their unlimited customer persist in a state of eternal throttle.

        Like I said the business model is unsustainable.

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      3. Sounds like you are a Verizon spokesman. “It’s just not a sustainable business model” my ass.

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        1. Kevin Fitchard Friday, May 18, 2012

          Hi Peter,

          Just because a lot of people like unlimited data plans doesn’t mean it’s a sustainable business. Though I don’t believe spectrum is quite as scarce as the carriers would have us believe, it’s still a limited commodity. Gas stations don’t offer unlimited gas plans. Carriers can’t go on supporting unlimited data plans if usage continues to surge.

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  4. I really don’t care if I use all my data each month….the ONLY reason I am trying to keep my grandfathered in plan is so that I KNOW how much my monthly bill will be….no surprise surcharges for overages! That’s it! I don’t care if I only use 24Kb in a month, at least I know my bill is nearly the same each month, not $45 one month and $112 the next! I’m always amazed they charge more if you go over their limits but there are no discounts when you’re under! If I pay for a certain amount of data each month and don’t use it, I lose it….and they whine about their profits, cry me a river.

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    1. Kevin Fitchard Thursday, May 17, 2012

      Hi Non,

      Good point. If operators were serious about having customer pay for what they use, they’d offer true metered plans instead of buckets that don’t reflect how customers actually use data. Have you checked out Ting? They will adjust your plan downward each month if you use less than your plan allows.

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      1. I only keep my grandfathered plan because despite what i’m using monthly now, I expect the trend of data usage can only go up. And, maybe it goes up exponentially over the next 5 years.

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  5. verizon trying to push me out of the line. ha! we are in the smartphone era where now noone sits in the living room and watch television, watch shows or movies. tv shows, news, and movies are all in a smartphone and tablet. dvds and blurays will be history soon. i connect my droid 4 or my tablet to my 84 in. hd tv and watch youtube or netflix or download movies. i dont have cable in my home the kids dont watch tv they are glued to there ipads and smartphones. im saving tons of money

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  6. Mobile Data Growth – The Gigabyte Generation
    Mobile data traffic growth continued unabated doubling again for the 8th straight year. We expect the mobile consumption to double again in 2012. Data now constitutes over 85% of the mobile traffic in the US. Approximately 30% of the smartphone users average more than 1GB/mo. As new devices and new network technology roll-out keep pace in 2012, the data traffic will grow at the expected pace. The signaling traffic is expected to grow in even faster. Stay tuned for our research paper in the Yottabyte series of papers on the topic later this year.

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  7. There are probably a few hundred thousand households with 3 or more smartphones (I say that as parents+1 or more kid). I can’t imagine that verizon is going to post growth by dropping revenue from all these houses somewhere in the 40-50 range. Maybe they’re going to offer free netflix or on demand over LTE.

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    1. Kevin Fitchard Thursday, May 17, 2012

      It does seem like shooting themselves in the foot doesn’t it, hortron? I believe Verizon thinks there’s a bigger picture here though. If it starts offering shared plans it would encourage people to connect more devices. Connected tablet take up is tiny. Hotspots aren’t that much better. It can’t get a world of three or four devices sharing a data plan without eliminating unlimited though.

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  8. perhaps a good move right now is to question data and smart phones altogether? I happen to not have a phone and enjoy the extra money. please put pressure on carriers by considering this thought. thanks

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  9. Don’t you feel your argument is a little bit leading? This country does more subsidizing of phones than any other. Providers want out of the high subsidy business. We should be able to get that much out of it. I imagine some people would gladly purchase their device outright if they could keep Unlimited data. Seems like somewhat of a fair exchange. Of course it would be better if they had option of keep unlimited or a discount of $x per month, but at least you have the option to keep unlimited. And perhaps another provider we know that uses SIM cards will allow this option as well. With Nexus devices being sold in Play Store, for $399, wouldn’t many a person jump on this to keep unlimited?

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    1. Kevin Fitchard Friday, May 18, 2012

      Hi JA2BK,

      I think some people will think it’s a fair trade and some people won’t (though it will skew to the latter). I think where we disagree is about Verizon’s intentions. It’s doing this specifically to lure customers off unlimited data. And if this doesn’t work it’s going to try something else.

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      1. I can agree that the intention is to lure customers off unlimited. I can also further say it’s their own faults, the carriers, that people became addicted to data usage. This issue began when they decided they were going to require data plans for smartphone purchases. So, if I’m paying for it, I might as well use as much of it as I can. Also they encourage use of data with their ads. If the network was a scarcity, I wouldn’t encourage everyone to use it. But, the ship has sailed on that issue (which I honestly wouldn’t mind if the lower allotment plans were cheaper). I think uptake of data would be much easier if you had a say $10 plan option to choose from.

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      2. I think I should further clarify that if they had a $10 (even $5) option with sensible data limit.

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      3. Kevin Fitchard Friday, May 18, 2012

        JA2BK, I agree with you there. It is a bit hypocritical of Verizon to say everyone needs to move over to tiered data and then not offer plans that actually reflect how most people use data. Given a choice between $30 for unlimited and $30 for 2 GB, it’s pretty obvious what most people would choose. The shared plans might bring more price flexibility (if VZ does them right), but it doesn’t help the single device/single user. Verizon has always been the premium operator, though, so if you’re looking to save money you’re probably at the wrong carrier. :)

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  10. I actually prefer to pay full price for an unlocked phone that my carrier HASN’T hacked with proprietary bloatware, so being able to pair it with an unlimited data plan is a fair deal IMO.

    It’s just too bad they don’t offer the same incentive on their speedy LTE mobile hotspots. The argument that unlimited is unsustainable is hogwash. I think if carriers were serious about providing users a realistic mobile broadband experience we would be seeing plans with data caps around 30GB and not a puny 5GB. I don’t need to list all the things a laptop can do.

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    1. Kevin Fitchard Friday, May 18, 2012

      I figured you weren’t going to agree with that statement, Luscious. What took you so long? :)

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