When Verizon Wireless decided last year to follow AT&T to eliminate its unlimited data plan for new customers, they allowed their exist customers to be “grandfathered” into their exist plans and retain their unlimited plans. Many customers were reluctant to change their plans in order to retain the unlimited data plans regardless if they actually needed the capacity. Today, Verizon announced their decision to eliminate the plan even for existing customers. As a result, Verizon no longer offers any unlimited data plans for smartphones or tablet PCs.
Verizon Wireless had been aggressively rolling out their 4G LTE network in most metro cities. As a result, it no longer made business sense to offer unlimited plans to their customers. The 4G LTE connection is advertised as being 10x faster than the 3G connection. Customers could effectively use the service as their primary internet connection at home with an unlimited data plan.
Understandably, this announcement has many customers up in arms and threatening to switch service. But before jumping ship, let’s considers some facts. I personally went into my Verizon Wireless account to check my data usage, and I found that I’ve only went over the 5Gb limit once in the last 6 months, and that was during March Madness where I was streaming NCAA basketball games over the course of about 4 weeks. I think it’s fair to say the average user would not go over the 5GB limit if they’re not regularly streaming music or videos on their device. If we compare the data plan prices against prices in other countries, the data plans that Verizon offers is actually fairly reasonable. Data plans found for the large service providers in the UK, such as Three, O2, and Orange, come out slightly higher than Verizon’s new plans. For example, O2 offers an equivalent of around $14 per 1GB.
Although the move could ultimately cost the company some loyal customers, shareholders of the stock should applaud the decision. Majority of the customers likely would not be affected by this change since the 5GB data plan should suite them just right.