Verizon data caps coming, probably by mid-summer
Verizon Wireless will join AT&T in adopting data caps soon, probably in mid-summer, Verizon CFO Fran Shammo said at an investor’s conference Tuesday.
The precise timing for the move to a tiered-pricing scheme has not been announced, however. AT&T put an end to unlimited data plans for new customers last year.
Verizon has been offering the iPhone 4 since Feb. 10 with a $30 unlimited plan, which applies to other smartphones it sells that run on the Verizon CDMA/EV-DO network.
Shammo said some of the details of the data caps and tiered pricing will come when Verizon launches the HTCThunderbolt on LTE soon. Thunderbolt will have a 4.3-inch screen and run Android, Verizon said in January.
“We will be launching the HTC Thunderbolt very shortly here and then that will give you a flavor of our tiered-pricing structure going forward,” Shammo said in comments delivered at the Morgan Stanley technology conference in San Francisco.
Later, he said, “We are going to [a] tiered pricing structure…, probably in the mid-summer timeframe.”
The unlimited $30-a-month option on Verizon’s EV-DO data network remains in place for now to avoid putting up a barrier to new customers. “But that was never a long-term strategy,” he added.
While he didn’t reveal details of tiered prices, Verizon charges $50 a month for 5GB of data and $80 a month for 10GB for LTE dongle devices, which could be in line with the pricing for smartphones and tablets, some analysts said. Since HTC Thunderbolt runs LTE, Shammo’s comments tend to support similar data pricing for smartphones.
Other Verizon executives have talked for months about the need to set up tiered pricing plans. The move is seen as a way to limit the use of its networks, which will grow with the sale of more smartphones and tablets that consume video and other data.
“Everyone knows unlimited data on wireless networks is unsustainable,” said Jack Gold, an analyst at J. Gold Associates. He was reacting to Shammo’s comments today.
“This says that Verizon is finally getting its usage up to the point where it needs to takesome proactive action to make sure it doesn’t have its network saturated. And it says that some users will be outraged, but the majority who don’t use that much data anyway probably won’t even notice and may actually be able to pay less for a lower limit. Bandwidth/data capacity is a limited commodity, and commodity pricing models are in play here, just like in all other limited commodities.”
Shammo also said only 26 percent of its customers use smartphones, a number Verizon hopes to double to 50 percent by the end of the year, especially with more LTE smartphones running on Android that Verizon plans to launch this spring. He said some Android users are upgrading to the iPhone, but didn’t elaborate.
He added that dongle users on LTE are “using a lot more [data] than they anticipate” and predicted customers will adjust. Verizon still hopes to sell 11 million iPhones by the end of 2011, he said, confirming earlier estimates.
Also, about 70 percent of the Motorola Xoom tablet customers are either existing Verizon customers new to tablets or customers new to Verizon entirely, he said. The tablet will be upgradeable to LTE in about two months, he said.
The Xoom has been on sale since Feb. 24, though he didn’t disclose sales figures.