Verizon: Usage-based LTE pricing on the horizon

Not surprisingly, Verizon Wireless said it most likely will offer usage-based pricing when it introduces commercial LTE service in markets later this year.

The revelation comes as operators in the 3G realm face a situation where data traffic is growing much faster than revenues. It appears they want a clean slate in the LTE realm by moving away from plain flat-rate pricing. Verizon Communications CTO Dick Lynch said this shift in the pricing paradigm comes because so many devices that will run on the LTE network will be ones that will come outside of Verizon's traditional sales channel. Verizon's 700 MHz spectrum comes with the stipulation that it allows outside devices on the LTE network.

Lynch said the operator will likely introduce a pricing scheme in which customers will be charged a base rate for using the network on LTE-connected devices--including tablets and appliances--but will then charge customers based on how much bandwidth they use.

"The problem we have today with flat-based usage is that you are trying to encourage customers to be efficient in use and applications, but you are getting some people who are bandwidth hogs using gigabytes a month and they are paying something like megabytes a month," Lynch said in an interview with the Washington Post. "That isn't long-term sustainable. Why should customers using an average amount of bandwidth be subsidizing bandwidth hogs?"

AT&T Mobility's Ralph de la Vega recently noted that 3 percent of smartphone users are generating about 40 percent of the operator's data traffic. AT&T, however, wants to stay away from usage-based pricing, at least in the 3G world. de la Vega's plan is to study consumer mobile data usage patterns and try to come up with ways to encourage these users to modify their usage. de la Vega noted that services such as video and audio constantly running around the clock are often driving these high usage problems.

For more:
- see this Washington Post article

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