Blog Post

Verizon: Where a Megabyte Costs Almost as Much as a Stamp

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Verizon Wireless (s vz) next week will begin requiring a minimum $10 data plan with some new feature phones, according to information obtained by Boy Genius Report. The move not only appears to mark the carrier’s most expensive data plan yet, it could be a sign of things to come with LTE. Verizon declined to confirm the report to GigaOM.

It appears that users who buy one of nine phones — dubbed “3G multimedia” handsets — will have to sign up for one of two data plans: 25MB a month for a whopping $10 (that’s 40 cents a MB) or an unlimited option that will reportedly replace the current 75MB plan for $30 (also 40 cents a MB). That’s right, Verizon thinks 1 MB is worth slightly less than a 44-cent postage stamp. The plans are substantially pricier than AT&T’s (s t) $15-a-month unlimited web add-on for feature phones  — which, of course, is optional — and follows  moves by both Verizon and AT&T to require data plans with all new smartphone purchases.

More importantly, the requirement and suggested data plans may signal Verizon’s plans to raise data fees for users on the LTE network it will begin to deploy this year. Verizon last week said LTE users will incur a basic subscriber fee plus usage charges based on bandwidth consumption. If the rumored price hike is any indication of what it will cost to use the 4G network, the carrier may not ever have to deal with the kind of congestion issues that AT&T has suffered due to the iPhone (s aapl) simply because no one will be able to afford it.

Image courtesy Flickr user abbyladybug.

14 Responses to “Verizon: Where a Megabyte Costs Almost as Much as a Stamp”

  1. You think that’s a lot? Think again. Text messaging is something like $1,400 per MB and is basically biggest rip-off in telephony. Ad hoc messages are $0.20 and a single SMS is about 140 bytes. 140 bytes = 7,000 messages per megabyte!!!! 7,000 x 0.20 = $1,400. Even an unlimited plan for $10 / month and say 1,000 messages is still egregious. 1,000 x 140 bytes = 140 kb – equivalent to $70 per MB!

  2. ok so i assume this is for subsidized phones. if we pay full retail price can we than use any plan we chose? what about for activations of second hand phones? this could be a boom for the second hand phone business and maybe also for full retail priced phones if it means more flexibility.

    believe it or not lots of people are buying high end phones mostly as fashion statements or status symbols.

    cricket and metropcs shops that offer to flash over phones from sprint or verizon typically offer either a partial(without data) or full(with data) flash. the most popular option for customer is partial even for the very high end phones.

    if verizon(and later others) start to require data plans for activating smartphones even used or full retail ones than i think there will start to be a strong movement towards GSM carriers with SIM cards.

  3. Wow, that is just mean.
    In Austria you have a 16 $ monthly contract with 1000 free min in all networks and 1 GB of free Data, with no contract time minimum.
    If you want more date it will cost you 21 $ for 15 GB a month.
    Yes T-Mobile Austria charges that much less… I really don’t understand how the US carriers can justify those prices.
    I mean Austria consists basically only of mountains, it is extremely expensive to maintain a great network coverage because every 2 miles some mountain blocks the signal and you have to build a new tower… I feel sorry for all US people getting ripped off so badly.

  4. barkleyfan

    Verizon is expensive. However, they reinvest in their network. I can actually use my droid outside a major metropolitan area. Which is nice. And why I opted for my Moto Droid over the TP2 I was origionally going to purchase from the Blue Deathstar.

  5. Anonymous

    Some analyst estimated that it costs carriers about 4 cents per megabyte. So at 40c per MB, VZW will have a 90% margin. Very sweet. We should buy Verizon stock :-)