Share |

Verizon wireless data plans to counter Apple VoIP move

Verizon Wireless' overhaul of their mobile data pricing has been restructured to head off Apple and possibly others in offering Internet calling plans. So said Citigroup analyst Simon Weeden in a report published recently.

Verizon is slated to launch its "Share All" rate plans soon. The plan offers unlimited calling and texting but customers share tiered data bucket across multiple devices. Verizon Wireless, co-owned by Verizon Communications and Vodafone, is planning to charge $10 to $ 40 monthly per device.

Weeden said non-Telecom companies are likely to offer voice over Internet protocol services, wireless 4G network using LTE (long-term evolution) technology. Apple, meanwhile, offers a free texting app as do others, like WhatsApp. The free texting app that siphoned profits from wireless companies, and VoIP app will do the same.

Verizon describes new plan as a "radical" change, Weeden wrote: "Voice and text are both unlimited in a move which anticipates the possibility of expanding its Apple iMessage free (texting) plan to voice over IP as well  as improved VoIP capabilities of LTE for other OTT (over-the-top Internet) players. "

"The intention is that customers who bring multiple devices will gain from the new schemes while there appears to be a price rise for solo smartphone users with below average data usage," Weeden added sternly.

Like several other analysts, he said Verizon’s near-term financial results can be roiled by the "Share All" plan. The average monthly revenue per subscriber could be affected.

"We are concerned that the first self-selection of high spending existing customers may lead to temporary earnings pressure," Weeden said. "We see some short-term risk - customers that can choose to keep their existing plan or switch to new, so self-selection may lead to relatively strong potential for price cuts existing high spenders, which is likely to be offset by lower users stepping up."

AT&T has also said it expects a shift to "data only" rate plans that presumably would include unlimited voice calls in the package.

Wireless carriers such as Verizon, AT&T, and Sprint Nextel is not expected to roll out their own Internet calling plan on LTE network until 2014.

Verizon Communications CEO Lowell McAdam, on a Guggenheim securities conference earlier this month, said customers will adjust to the "Share All" plan.

"Customers are telling us for years, I do not want to have a separate account for my iPad. If I'm going with four tools in my house ... I do not want four different accounts for that, "McAdam said.

"So I think this is a very important change — it's a sea change and somebody, one of the analysts said this, and as I look back at my two decades in the wireless industry, this, I think, dramatically changes how people feel about their devices. They don't have to think about it, just makes life so much easier for them.

"Is it going to cost them more money? Yeah," McAdam answered his own question. "But it'll probably shift their wallet spend from other things that they do individually into this sort of a bucket of gigabytes. And, so I think it will be a significant revenue stream for us."