Monday, May 25, 2015

Verizon warns again of end to unlimited data

The funny thing is, the horizon keeps shifting farther off. Could Verizon be going after all those customers who just think they use a large volume of data?

Verizon warns again of end to unlimited data

I don't think this is the Phone Company That Cried Wolf, but the timing and the underlying economics are intriguing.

Earlier this week, Verizon chief financial officer Fran Shammo told a Morgan Stanley conference that the nation's largest cell-phone company would quit offering an unlimited-data package to smartphone customers "as soon as this summer," according to a Bloomberg News report.

Shammo was echoing comments made by Verizon chairman Ivan Seidenberg in September, and rumors going back at least to the time of AT&T's decision last summer to drop its similar unlimited, $30-a-month data plan.  Some analysts have long seen this coming, because of the inevitable dance between data hogs and companies with limited and congested bandwith.

But in September, Seidenberg predicted an end to Verizon's unlimited-data plan in "four to six months," according to this report.  So now Shammo has pushed back the shift a minimum of three months.

What's going on? Could Verizon be going after all those customers who just think they use a large volume of data?

Verizon spokesman Sheldon Jones didn't have much light to shed.  "We will move to tiered data pricing, but there’s no date announced for that," he told me.  But Jones said that any shift would grandfather in current unlimited-data customers - so if you're an AT&T data hog and want to move to Verizon, now is the time to jump.

How big a concern is congestion? Until Verizon moves to its new LTE network, it lags AT&T in data speeds, as I discussed in today's Tech Life column in the Inquirer about RootMetrics' online tools for evaluating coverage from the major carriers. (You can try it here.) The last thing Verizon wants is a boost in the demand from the new Verizon iPhone 4 to undermine its hard-won claim to be "the nation's most reliable wireless network," which was supported again today by the latest survey from J.D. Power & Associates. 

Verizon led or tied in five of the nation's six regions - the exception was the north-central region, where Power said U.S. Cellular is continuing its lead.  But in the mid-Atlantic region, which includes Pennsylvania, Power shows Verizon and AT&T tied for overall quality.

Power says data is part of the problem: "Shifts in wireless phone usage, including smartphone and texting use, as well as an increase in the percentage of wireless calls being made and received inside buildings, has led to a halt in overall call quality improvement," the company said in a news release.

Last year, longtime wireless Roger Entner, then at Nielsen, laid out the data-driven challenge in a report and graph that dramatize how much data is consumed by the data-hungriest fraction of smartphone users.  The top 1 percent of users were averaging nearly 2 gigabytes of data usage a month - coincidentally, the threshold where they would hit over-limit charges under AT&T's metered plans.

Perhaps most important, those high-end users had more than doubled their own data consumption from a year earlier. And the pattern was true down to the 50th percentile, and below.  Big surprise: Smartphones are essentially mobile computers, and consumers are using them as such.

Enter called it the coming "mobile data tsunami."  The only question is when it will actually crash to the shore, and how the carriers and their customers will try to cope and cash in.

Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist