Verizon CFO: We will move to tiered data pricing mid-summer
Verizon Wireless (NYSE:VZ) will unveil tiered mobile data pricing plans this summer but the company is still figuring out what exactly those pricing plans will entail. Verizon Communications CFO Fran Shammo told investors at the Morgan Stanley Technology, Media & Telecom conference Tuesday that these upcoming tiered pricing plans could be based upon consumption or speed differentiation, or both. "We are still working on the models," he said.
Shammo added that the company initially launched the CDMA version of Apple (NASDAQ:AAPL) iPhone 4 in February with an unlimited $30 per month data plan because it did not want to provide a barrier to anyone who wanted to experience the iPhone. "Everyone knows that isn't long-term," he added. "We will move to tiered pricing in the mid-summer time frame."
AT&T Mobility (NYSE:T) has already moved to a tiered data pricing model for the iPhone. The company introduced the new pricing when it launched the iPhone 4 last June. AT&T offers 200 MB for $15 per month and 2 GB for $25 per month.
Shammo praised Verizon for its iPhone 4 launch earlier this month, which he said had gone "flawlessly." He also reiterated what Verizon Wireless CEO Dan Mead told the Wall Street Journal recently: that 60 percent of the iPhone purchases were made online, which he said shows a shift in the marketplace from in-store sales to online sales.
He added that the company is expecting its smartphone penetration rate to grow from 26 percent at year-end 2010 to 50 percent by year-end 2011, an aggressive target but one that he believes they will be able to meet through sales of the iPhone, the Droid franchise of smartphones and LTE smartphones that will be launched later in the year. However, he added that tiered pricing will be an important part of that goal because as the prices of smartphones decline, more people will be able to afford the devices but will need an entry level price point for data usage. "We are wrestling with that entry point."
Shammo added that when Verizon trialed a $15 per month tiered data pricing plan late last year, it "stimulated activity." However, the company removed that price plan option when it launched the iPhone.
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Article updated March 1 to correct the pricing of AT&T's data plans. AT&T charges $15 for 200 MB.