Verizon's new data plans may seem like a competitive response to T-Mobile's own uncarrier tweaks, but a Verizon executive vice president says they were in the works for a long time and are part of a larger move towards simplification ahead of the next iPhone launch.
On Thursday, Verizon Wireless will launch its new Verizon Plan, which does away with smartphone subsidies and contracts, instead prompting customers to choose from a small, medium, large or extra-large data bucket and either bring their own device or pay it off in monthly installments. (See Verizon Ditches Wireless Service Contracts.)
Many in the industry, including T-Mobile US Inc. 's own CEO John Legere, said Verizon's new plan structure was a result of T-Mobile doing away with smartphone subsidies and contracts, but David Small, executive vice president of wireless operations at Verizon Wireless, said the plans have been in the works for a long time as part of a move to simplification. (See T-Mobile Gives More Data to Families.)
Speaking at the Oppenheimer conference Tuesday, Small said Verizon felt now was a good time to launch because of people doing back-to-school shopping. And, he said, in a month or so "there could be a significant device launch" that Verizon would want to have pricing ready for, referring, of course, to Apple Inc. (Nasdaq: AAPL)'s expected iPhone launch in September.
"So, look, this was not a reaction in any way, shape or form," Small said. "This is something we've had in the works for quite some time. We had it essentially at the ready. We also knew this dovetailed very well with what we wanted to do in terms of device payment, or installment plans, so the timing worked very well there as well."
With the new plans, Verizon customers can change their bucket any and every month, but the carrier hopes more will opt for the higher-data family plans. Small said as they consume more, it becomes more cost effective for them and more financially attractive for Verizon. It will also offer higher plans than the $80 12GB monthly plan, but won't advertise them.
"It's really simplistic, and we can help categorize consumers and their usage patterns in a very simple way to help them guide what data allocation they might need," Small said, later adding that he expects existing customers to upgrade to the new plan and new customers to switch to Verizon for it.
Don't be surprised if Verizon stops telling its customers when they're close to their data caps though. Small said Verizon has a lot of tools in place to alert customers of their usage, but that it's not a great message to have when it wants to sell more data. Plus, he said, Verizon's research with Millennials on family plans suggested they didn't like the alerts. They felt like Verizon was telling on them to their parents about their data consumption.
"For that and many other reasons, this notion of adding more value and having consumers move up in the curve in terms of their consumption is good for the industry, and we certainly think it's good for us from an investment point," Small said.
Regardless of Verizon's motivations, contracts and subsidies of yore are officially a thing of the past. In addition to T-Mobile, Sprint Corp. (NYSE: S) recently launched its All-In pricing plans designed to simplify bills, while AT&T Inc. (NYSE: T) has been pushing its Next plan for awhile now. (See Sprint Goes 'All-In' on New Pricing Plan and AT&T Gets 81% of Subs Off Unlimited Data.)
The plans should, hypothetically, help consumers better understand where their money goes each month and potentially find a plan that best fits their actual usage. The plans could also mean more customers hold on to their devices longer as they realize how expensive they are without a subsidy. In addition, the lack of contracts means consumers are free to jump ship each month, however, that's not likely to happen given the incompatible spectrum bands wireless carriers still have in the US.
— Sarah Thomas, , Editorial Operations Director, Light Reading