Verizon will kill 'grandfathered' unlimited data plans, push users to data share

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Verizon Wireless (NYSE:VZ) plans to eliminate the $30 per month unlimited data plan that it still provides to 3G customers who were "grandfathered" into the plan because they were data customers prior to the company's switch to tiered data pricing last July. Speaking at the 40th Annual J.P. Morgan Technology, Media and Telecom conference, Verizon Communications CFO Fran Shammo said that as these 3G unlimited data plan customers migrate to 4G LTE, they will have to purchase the company's data-share plan (which Verizon plans to launch in mid-summer) and move off the $30 per month unlimited data plan. "Everyone will be on data share," Shammo said.

Verizon CFO Fran Shammo

Shammo

Verizon's data share plan is scheduled to launch in mid-summer but no pricing details have been announced. Shammo said that he believes this new plan will make it easier for families and small businesses to connect multiple devices. The industry, Shammo said, has constrained the market around connected devices because people think they need an additional data plan. "If I can add as many devices as I want, that is more efficient from a family perspective and a small business perspective," he said.

However, Shammo said that with the launch of this new data share plan, the industry will have to change a key metric--average revenue per user. Shammo said that Verizon will move to a "revenue per account" metric that will more accurately measure the company's business.

When asked how Verizon will drive customers to this new data share plan, Shammo said that LTE will be the anchor for the new plan and that as customers upgrade from 3G to LTE, they will have to be on a data share plan, allowing the company to sunset its unlimited 3G data plan. "So as you come through an upgrade cycle and you upgrade in the future, you will have to go onto the data share plan," Shammo said, according to a transcript of his remarks. "And moving away from, if you will, the unlimited world and moving everybody into a tiered structure data share-type plan."

"So when you think about our 3G base, a lot of our 3G base is unlimited," he added. "As they start to migrate into 4G, they will have to come off of unlimited and go into the data share plan. And that is beneficial for us for many reasons, obviously."

Verizon later issued a statement clarifying Shammo's remarks, as there was some confusion about when the unlimited data plan would sunset. Specifically, the company said that customers with unlimited plans will get to keep their unlimited plans. However, when shared data plans become available, the unlimited option will no longer be available to customers when they buy a new device at a subsidized price, which usually happens with a two-year service contract.

In an unrelated note, Shammo also said that the company will launch Voice over LTE technology at year end, but will not push the technology until mid-2013 when it has a bigger LTE footprint. In fact, Shammo noted that by the end of 2013 Verizon's LTE footprint will be equal to or even bigger than its existing 3G footprint.

For more:
- see this webcast
- see this Verizon transcript
- see this New York Times article

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This article was updated May 17 to include the statement from Verizon providing more details about what happens to unlimited data plans when consumers upgrade their devices.