Revolution. Innovation. Consumer triumph. These are the words initially applied to one of the first major rollouts of multi-device shared family mobile data plans, though some say the launch is a raw deal for the typical smartphone user.
Verizon Wireless has taken the wraps off of its “Share Everything” wireless data plans, which cover multiple devices with one bucket of bandwidth. Available as of June 28, users can add up to 10 devices under the same contract for a per-device fee. Those monthly fees run $40 for smartphones, $30 for basic phones, $20 for laptops and $10 for tablets. Then, the plans begin at $50 a month for 1GB of data and increase to 10GB for $100 a month. Unlimited voice and texts are also included.
New or upgrading customers will have to choose a Share Everything plan. Existing users will keep their plans, but Verizon’s current pricing structures will sunset as customers upgrade their phones.
Verizon is the first carrier to offer a pool of bandwidth that can be shared across devices, something that Sanford Bernstein analyst Craig Moffett called “the most profound change to pricing in the telecom industry has seen in 20 years.” It is certainly a sea change: AT&T has eschewed unlimited data plans for tiered pricing for 3G and 4G, while Sprint Nextel continues to offer unlimited data plans across the board. Meanwhile T-Mobile offers unlimited 3G, and capped 4G. All plans are tied to single devices.
A multi-device plan however allows an operator to encourage device adoption and drive more traffic, which can in turn be monetized in the form of upselling to bigger data packages or offering personalized multiscreen service bundles. In Verizon’s case, an initial strategy is as-you-go bandwidth top-up: Users will get text message alerts that their data cap is approaching, and will be prompted to increase their allotment for that particular month without altering their contract.
The move also encourages customer stickiness, since users with multiple devices on a carrier are less likely to churn.
“In the high-fixed-cost world of telecom, pricing is the foundation of strategy,” said Moffett.
Other analysts were similarly impressed: “We view this as a very positive move for [Verizon Communications]. The main benefit is to stimulate device adoption and usage on its LTE network,” writes Wells Fargo analyst Jennifer Fritzsche.
A breakdown of plan comparisons reveals an ARPU boost for Verizon in the new structure, based on the fact that talk and texting are decreasing pieces of the revenue pie. For instance, on existing individual plans, someone with a 2GB allotment and a smartphone pays $90. That includes unlimited SMS but only 450 voice minutes. In contrast, the same price under the new plan for one smartphone ($50 for usage and $40 for the device per moth) cuts the bandwidth allotment in half to 1GB, and adds unlimited talking a perk that likely does not make up for losing data capability.
Of course, for families and even some individuals with multiple devices that have embedded mobile data chips, the plans offer a much more elegant and potentially less expensive alternative to carrying multiple plans per device. Verizon is first out of the gate with an innovative pricing approach, but whether it goes far enough to be truly differentiating and just how much that simplicity is worth vis-a-vis the existing offerings remains to be seen.
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May 18 2018 @ 20:40:07 UTC