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Verizon Wireless to Change Phone Plans
NEW YORK (AP) - Verizon Wireless, the nation's largest cellphone company, is dropping nearly all of its phone plans in favor of pricing schemes that encourage consumers to connect their non-phone devices, like tablets and PCs, to Verizon's network.
The new plans will become available on June 28, and reflect Verizon's desire to keep growing now that nearly every American already has a phone. The plans let families and other subscribers share a monthly data allowance over up to 10 devices.
It's the biggest revamp in wireless pricing in years, and one that's likely to be copied by other carriers. AT&T Inc. has already said that it's looking at introducing shared-data plans soon.
Change, across the industry, was inevitable. In the first quarter of this year, phone companies, for the first time, reported a drop in the number of phones on contract-based plans, which are the most lucrative. To keep service revenues rising, the phone companies are betting on increased data usage, and that means getting more data-hungry devices on their networks.
Verizon's new "Share Everything" plans, announced Tuesday, include unlimited phone calls and texting, and will start at $90 per month for one smartphone and 1 gigabyte of data. If used only with a smartphone, "Share Everything" prices are lower than for current plans with unlimited calling and texting, but higher than plans with limited calling and texting.
The plans will push many subscribers toward spending more, by including unlimited calling and texting by default. Unlimited calling plans provide peace of mind, but not many people need them, and the average number of minutes used is declining.
From the carrier's perspective, providing unlimited access is an efficient use of its network, because calling and texting take up very little capacity. Data usage, on the other hand, consumes a lot of network resources.
The savings will come to subscribers who add more devices like tablets to their plans. In such cases, the new pricing system will be cheaper compared with separate data plans for each device. Today, few consumers put tablets on data plans, probably because they dread paying an extra $30 or so per month, on top of their phone bills.
Under "Share Everything," adding a tablet to a plan will cost $10 per month. Adding a USB data stick for a laptop will cost $20.
Verizon's limited-calling and texting plans will disappear, except for one $40-per-month plan intended for "dumb" phones. Verizon is keeping its limited-data plans for single non-phone devices, like the $30 tablet plan.
Current Verizon customers will be able to switch to the new plans or keep their old ones, with one exception. Those who have unlimited-data plans for their smartphones won't be able to move those to new phones, unless they pay the full, unsubsidized price for those phones. (For example, an iPhone 4S that costs $200 with a two-year contract costs $650 unsubsidized, with no contract.)
Verizon stopped signing people up for unlimited-data plans last summer. The industry as a whole is moving away from the plans, since the data capacity of their networks is limited.
Under the new plans, subscribers can stop worrying about monitoring the number of calling minutes or text messages their families use in a month, but they'll have to keep a close eye on data consumption. Verizon will allow subscribers to adjust their data allowance from month to month, but if they go over their monthly allotment, that will cost $15 per gigabyte.
The data allowances start at $50 per month for 1 gigabyte. That's enough for prudent two-smartphone users who use Wi-Fi a lot, but Verizon recommends getting 2 gigabytes for $60. After that, each additional 2 gigabytes cost an extra $10 per month.
Under "Share Everything," Verizon will stop charging extra for letting devices act as "mobile Wi-Fi hotspots." That means subscribers who have a recent smartphone could use it to connect a tablet to the Internet, without paying the extra $10 per month for a tablet.
Verizon had telegraphed the move toward shared plans, but had not revealed the details or pricing.
Verizon Wireless has 93 million subscribers on its plans. It's a joint venture of New York-based phone company Verizon Communications Inc. and Vodafone Group PLC, a British cellphone company with wide international interests.
Some questions and answers about Verizon Wireless' new Share Everything plans, which go into effect June 28.
Q: Will Verizon convert me to a new plan, or can I keep my old plan?
A: Verizon won't switch you over to the new plan unless you ask. You can keep your old plan, even if you trade up to a new phone after that date and extend your contract. But for new customers, Share Everything will be the only alternative, with a few exceptions, starting June 28.
Q: What type of customer should move to the new plan?
A: If you already have unlimited calling and texting plans, the new plans are likely to save you money, especially if you have a family plan. If you have a tablet, the new pricing scheme could be a good idea too. Even if your tablet doesn't have a cellular modem, you may be able to take advantage of the plan, because it lets you create a "mobile hotspot" with your smartphone, so you can go online with your Wi-Fi-only tablet.
Q: What if I have an "unlimited data" plan? Can I keep it?
A: Yes, you can. But -and there's a big "but" here- Verizon will no longer let you move the plan to a new phone after June 28, unless you pay the full, unsubsidized price for it. For most smartphones that will add hundreds of dollars to the price. A subsidized Verizon iPhone 4s costs $200. The price you'll pay if you keep your unlimited plan: $650. (Verizon stopped signing up new customer for unlimited a year ago)
Q: I have a phone and tablet, but they're on different carriers. Can this plan work for me?
A: Probably not. The plan encourages you to use only Verizon-compatible devices. But if you have a Verizon smartphone and an AT&T iPad, you could cancel the AT&T service and use the hotspot mode mentioned above. It's just not as convenient has having direct cellular access on the iPad.
Q: I don't need a fancy data plan. I just want a regular phone, with no frills. Are the calling-only plans going away?
A: Almost. There will be only one plan for basic phones. It costs $40 per month and gives you 700 minutes of calling. Texting and data will cost extra. For this type of phone, there are cheaper, no-contract alternatives from many companies.
Q: I'm single and I just want a smartphone, that's it. The cheapest Shared Everything plan looks pretty expensive at $90 per month, and that's with just 1 gigabyte of data. Is there no alternative?
A: There's one cheaper plan, intended for first-time smartphone buyers. It gives you unlimited calling and texting, and just 300 megabytes of data per month. If you're frugal with data usage, that will get you by. It costs $80 per month.
Q: Is this the future? Are all phone plans going to be this way?
A: For its part, AT&T is likely to go in this direction as well. It makes sense for phone companies to meter only the data usage. They can easily provide unlimited texting and calling, but data usage stresses their network. They also want to get as many new, non-phone devices as possible on their networks, and, for customers, shared data plans are cheaper than putting each device on a new plan.
That said, there's likely to be a wide variety of phone plans in the industry.
Q: How do data plans work in other countries?
A: They mostly limit data usage per device, the model Verizon is moving away from. Contract terms are often more flexible overseas, however, and more phones and Internet devices are pay-as-you-go rather than bound by contract.