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Verizon's Data Hog Fix: Tiered Pricing

Wed, 05/25/2011 - 8:20am
Maisie Ramsay, Wireless Week

Verizon has some ideas about how to fight bandwidth hogs: charge them for it.

At an investor conference yesterday, Verizon Communications CFO Fran Shammo said Verizon Wireless' upcoming tiered pricing plans would essentially force customers who consumed copious amounts of mobile data to pay for it, prompting customers to rein in their data use.

"The user who wants to use a lot will pay for it," Shammo said Tuesday at the Barclays Capital Global Communications, Media and Technology Conference. "So from an unlimited perspective, you won't have somebody using a ton of network capacity but still only paying $30 a month... people who are going to be using a lot are going to be paying an awful lot as well."

Verizon Wireless has said it will scrap its unlimited plans this summer for plans that charge tiered rates for increased levels of data use. Shammo declined to provide an exact date for the company's introduction of tiered pricing, but confirmed that its unlimited plans would end this summer.

"I'm not going to go into exactly what we are going to launch in the summertime, but we actually will be going to tiered pricing. The unlimited pricing will be taken off the table," Shammo said.

Verizon introduced a $30 unlimited data plan for its feature phone and smartphone users in January to entice customers to pick its service for the iPhone over AT&T, which had stopped offering unlimited data last summer.

The wireless industry has been moving away from unlimited pricing in an effort to combat skyrocketing, network-clogging data use by their smartphone and USB modem customers.

AT&T was the first to move to tiered pricing and scrapped its unlimited plan in June 2010. T-Mobile markets its data plans as unlimited, but the company throttles back speeds after users hit a pre-set data cap. Sprint still offers unlimited data plans, a benefit of the capacity provided by Clearwire's WiMAX network, but has not completely ruled out a move to tiered pricing.

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