New rate plans move to new naming scheme and pricing adjustments
Verizon Wireless is set to adjust its more popular shared data plans to a new naming scheme as well as put a greater emphasis on its previously labeled Edge device-financing program.
The carrier said that beginning Aug. 13, it will rollout new rate plans that include a bucket of data access labeled “small” for 1 gigabyte of data, “medium” for 3 GB of data, “large” for 6 GB of data and “x-large” for 12 GB of data. The data buckets will include unlimited voice calling and text messaging, and will be priced at $30, $45, $60 and $80 per month, respectively. Data overage will be charged at $15 per GB, with each bucket able to support up to 10 devices.
Customers needing more data will be forced to venture to a Verizon Wireless store.
Verizon Wireless’ current pricing schematic offers 1 GB of data at the same $30 per month, 3 GB for $50, 6 GB for $70, and no current offer for 12 GB, though 10 GB is available for $80 and 15 GB for $100. No word from Verizon Wireless if buckets below the 1 GB level will be retained, with the carrier currently offering a 500-megabyte entry for $20 per month.
The carrier said the move is being made to simplify the purchasing process for consumers using a different scale model as “everyone understands these common sizing options. … These new data options come in sizes just like other things we buy.”
“Customers said they don’t want to have to do a lot of math to figure out their best options, and we heard them,” explained Rob Miller, VP of consumer pricing for Verizon Wireless. “A plan with small, medium, large and x-large choices makes sense for the way people actually use their wireless service.”
Connected with the new rate plans will be an adjustment to per-line access charges, with smartphones now at $20 per month; tablets and mobile hot spots priced at $10 per month; and “connected devices” like smartwatches priced at $5 per month regardless of the size of the bucket selected. The new pricing is $5 more expensive per month for smartphones on data buckets of at least 6 GB, though $5 less expensive on data buckets of 4 GB or less; $10 less for mobile hot spots; and tablets and connected devices stay the same.
Perhaps a bigger headline grabber is that the new rate plans will only be available through Verizon Wireless’ device-financing program, which it noted was “formerly known as Verizon Edge,” seeming to indicate a potential name change. The program, which was launched in 2013 following the lead of T-Mobile US and AT&T Mobility, tacks on a monthly charge for the device on top of the rate-plan charge, or customers can pay full price for their device upfront.
Contracts tied to devices will not be allowed access to the new pricing, with no word yet from Verizon Wireless if it will offer a device subsidy model to new customers. Customers can currently sign up for shared data buckets and receive a subsidized device tied to a one- or two-year device contract, though they pay $40 per month per smartphone to access the bucket.
Verizon Wireless noted that just under half of its new smartphone activations signed up for its device financing option during the second quarter, which is significantly lower than results posted by rivals AT&T Mobility (68%) and T-Mobile US, which has completely done away with device contracts. Verizon Wireless said it expects 60% of new smartphone activations to sign up for a device-financing option in the third quarter.
Analysts have said they expect device-financing activity to provide at least a $2 billion boost to Verizon’s earnings before interest, taxes, depreciation and amortization in 2016, though some also note the carrier will still be on the hook for more than $400 million in device subsidies that will dilute the overall EBITDA benefit.
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