Why Verizon is offering shared data plans
I've been calling for family/shared data plans for more than a year, and now Verizon Wireless (NYSE:VZ) has finally delivered with its Share Everything data plans, which will go into effect June 28 for new customers.
As the Wall Street Journal points out, some users will pay more under Verizon's new pricing structure, while others will pay less. So why is Verizon launching these new plans? There are three main reasons, from my perspective:
Continue to collect revenue from voice and texting: Voice and text message usage is declining as subscribers increasingly use their phones for applications and mobile data. And Voice over LTE technology and services like Apple's (NASDAQ:AAPL) iMessage could hasten this trend. Indeed, AT&T (NYSE:T) CEO Randall Stephenson rightly noted that voice calling and text messages are now "commoditized." By combining its data services with unlimited voice and text, Verizon is making sure it will squeeze revenues from its legacy services while the transition to data continues.
Drive people to data: And let's not kid ourselves--data is the name of the game here. A big benefit of the new plans, and something I have been waiting for a long time, is the ability to, say, add a tablet to a family's portfolio of devices without having to shell out for a separate data plan. Analyst studies have consistently shown that consumers have favored Wi-Fi-only connections on tablets for precisely this reason. These new plans will encourage subscribers to sign up for more devices with cellular data connections by giving them a bucket they can all sip from.
Set up future growth: Verizon seems fairly confident about how the new plans will affect its business. "This is really intended to drive growth," CMO Tami Erwin told Reuters. "My expectation is it doesn't change our margins." Right now the focus is on smartphones, tablets, USB modems and the like, but Verizon's plans could also be used to connect in-car entertainment, home monitoring devices and other machine-to-machine applications. Verizon clearly has conusmer-facing M2M on its mind with these plans. "In the future you can envision all kinds of connections," Erwin told AllThingsD. "This pricing, because it is so dramatically different, really fuels the ecosystem."
Verizon's new plans are not going to be a great fit for every consumer or every family; some will likely have to pay more. And to be clear, this is just the opening move in what could be a long battle. AT&T has promised it will also offer shared data plans, though company executives have said AT&T will focus mainly on getting customers to connect their tablet or USB modem or wireless dog collar to their smartphone plans.
Additionally, I think that others will--and must--innovate on these kinds of plans. The ability to change or limit how much data or what kinds of data certain devices can access--and at different periods of time--seems to be the logical step, especially for parents who, say, don't want their kids eating up the entire monthly data bucket by playing an online game for three hours each night.
There's still a long road ahead as data plans evolve. Verizon has taken a big step with the new shared plans, and I'm glad to see it happen. --Phil