Citing increased usages, Verizon is set to alter rate plans with more data at higher prices, though lower per-GB, in continued fight for customers against rivals
Verizon Wireless moved on recently rumored rate plan changes, offering customers more data across buckets at higher-priced tiers, though lower per-gigabyte rates. Those packages also come with some extra perks that may take the sting out of the price increase.
Beginning July 7, Verizon Wireless’ current data buckets will have their sizes and prices altered to reflect what the carrier said is the new reality of consumers using more data. According to the carrier, average customer data usage has spiked from about 1 GB per month in April 2013, to 2.7 GB per month this past April.
As such, data buckets will indeed swell to previously reported sizes and costs, with the carrier’s “small” data bucket set to double to 2 GB for an extra $5 per month; the “medium” plan will grow from 3 GB to 4 GB and from $45 to $50; the “large” plan increases from 6 GB to 8 GB and in price from $60 to $70; the “extra large” plan from 12 GB to 16 GB and a $10 price increase to $90; and the “extra, extra large” plan from 18 GB to 24 GB with a price surge from $100 to $110.
The data buckets will continue to have a separate per-device charge for lines accessing the shared data, which is currently at $20 for smartphones, $10 for tablets or mobile hot spots and $5 for “connected devices.”
Verizon Wireless last August rolled out its clothing-sized data buckets in a somewhat controversial move that did away with rate-plan-based device subsidies. The carrier later added the XXL-sized data bucket, while continuing to offer even larger data buckets that forgo a bite-sized label.
In addition to the rejiggered data buckets, the new plan changes include a “Carryover Data” option allowing customers on any size data bucket to keep unused data for one month as well as a “Safety Mode” that curtails network speeds should customers exceed their data bucket allowance, which is standard on XL and XXL data plans, and a $5 upcharge for smaller data buckets.
The speed throttling is set to take customers down to 128 kilobits per second, with the move coming from the throttling of LTE speeds and not actually moving the customers off of the LTE network to Verizon Wireless’ legacy CDMA-based 2G or 3G service.
Verizon Wireless’ current policy is that unused data allotments are lost at the end of each billing cycle, while customers who go over their data bucket are charged $15 per GB in overage. The new plans include a “Data Boost” option allowing customers to purchase 1 GB of overage data for $15, although the new rate plans will continue to automatically add the 1 GB of data for $15 should customers blow past their data allotment. That extra data, regardless of its source, also will be included in the carryover feature.
Customers will also have access to an updated My Verizon mobile application designed for greater control and monitoring of plan usage. Verizon Wireless noted customers will be able to see data usage, remaining data availability, change rate plans and tap into the Data Boost option from the platform.
To further entice consumers toward larger data buckets, the XL and XXL plans will include access to all rate plan features while traveling in Canada and Mexico, including voice calls, text messages and high-speed data access. Customers on lower-tier plans will have access to unlimited calling to Canada and Mexico for $5 per month, or can purchase the carrier’s Travel Pass option for roaming across North America at $2 per day.
Verizon Wireless initially rolled out Canada and Mexico roaming options last summer following the “Mobile without Borders” service launch from rival T-Mobile US.
Current customers can continue with their current plans, though the carrier noted customers looking to tap into the new features will need to make the move to the new offerings.
For consumers, overall per-GB pricing does fall with the new plans despite the greater outlay to cover increased monthly pricing. Rob Miller, VP of consumer pricing at Verizon Wireless, said the carrier would monitor uptake and usage to see if it may be necessary to reintroduce a lower-tiered data bucket for the market.
Miller also acknowledged that the pricing changes could come out revenue-neutral for the carrier as the increased charge per data bucket might see an offset from customers paying less in overage charges tied to the Safety Mode feature.
A more substantial cost savings for the carrier could come in the form of lower customer care expenses should consumers increase their use of self-care options through the enhanced mobile application. Wireless carriers have more aggressively targeted self-care options for customers over higher-cost call centers, noting consumers are increasingly looking at such options for their carrier interactions.
Verizon Communications earlier this month admitted a recently resolved labor strike would hit financial results for its recently completed second quarter, with that hit expected to stay on the books for the remainder of the year.
Verizon Communications’ CFO Fran Shammo, speaking at a Bank of America Merrill Lynch conference, said the company will see an earnings impact of between 5 cents and 7 cents for Q2 related to the labor strike, with that financial impact set to also hit full-year results. Shammo explained the costs are coming from overtime paid to management employees, hiring contract workers to cover for striking workers and a decrease in new business installations. That decrease is expected to result in Verizon posting net losses across its FiOS broadband business for the quarter.
As for its wireless operations, Shammo said the company does not expect any impact, “so it will be a normal quarter for wireless.”
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