Verizon Considers Change in Data Plan Pricing

Verizon Communications Inc. executives are considering changing the prices of data plans if they decide to implement new 4G technologies. These packages would charge more for plans that ran on 4G service. "If you want to pay for less speed, you would pay for less speed and consume more, or you can pay for high speed and consume less," said Chief Financial Officer Fran Shammo. However, this new pricing strategy largely depends on whether or not Verizon decides to embrace 4G technologies. If it did, it would be following in the footsteps of Sprint Nextel Corp. and T-Mobile USA. Because Verizon has not previously offered tiered pricing for data plans, it is planning on testing the strategy during this years holiday season by offering a $15 plan with a capped amount of data as an option against their typical Unlimited data plan.

Verizon currently dominates the cell phone service industry, so when they decide to make a change it reflects a larger change that is occurring across the market. 4G is clearly the next move that all cell phone providers will need to take in order to remain competitive in the field, just as 3G was a few years ago. This will be a long and expensive process for most companies, as it requires building entirely new infrastructure across the US. Therefore, companies such as Clearwire Corp., that build 4G infrastructure will probably be the first to profit from the 4G switch in the next few years, with the cell phone provider companies seeing these profits once the new infrastructure has been established. The tiered pricing change reflects higher consumer demand for options in data as they have seen options for calling plans for years. More and more phones are being used as mini computers rather than simply as calling devices, and greater variety in data plans really reflects this switch in use.