In January, Verizon Wireless overhauled all of its data pricing plans as part of an effort (according to CEO Lowell McAdam) to streamline and simplify its offers to consumers and make the organization more efficient. Specifically, the company tied its data plans to certain types of devices. For example, a 3G smartphone (which it defined as having a Web browser and allowing customers to download apps from app stores) requires a $30 per month data package, while less sophisticated 3G multimedia devices (defined as having HTML browsing and apps based on Qualcomm's BREW platform) requires a $9.99 per month data plan for 10 MB of data. The least sophisticated phones (called simple feature phones that are 1xRTT devices and just offer text and talk) require no data plan.
Sounds simple, right? But just five months after announcing this revamped and simplified pricing scenario, Verizon is already tweaking the rules for certain handsets. Computerworld's Matt Hamblen reports that consumers who purchase Microsoft's new Kin phones--which are clearly not smartphones because they don't have the ability to download apps or games--will be charged the hefty smartphone data fee of $30 per month for unlimited data.
Verizon justified the move by claiming the Kin is a new category of device that falls somewhere between a smartphone and a 3G multimedia device, and since it offers a rich browsing experience and can backup multimedia files it will use more data. But the end result is a blurring of the lines between what constitutes a smartphone, a 3G multimedia phone and a simple feature phone. And I expect the lines will continue to blur as manufacturers innovate.
But I fear the end result is more confusion over data pricing. If a carrier's device portfolio can't be categorized into three segments--smartphone, 3G multimedia phone and basic feature phone--perhaps that carrier shouldn't tie data plans to devices, and instead start migrating to usage-based data plans. Although consumers don't like the idea of usage-based plans, they may be more amenable when they realize that they can purchase the device they want without being forced into a data plan that may not accurately reflect their usage.
I've seen the advertisements for the Kin and clearly Microsoft and Verizon are targeting the social networking teen audience for this device. But with a $30 per month data plan coupled with a voice plan, most teens will have to pay at least $70 per month for this device. I can't imagine many parents willing to fork over that much money per month so their teen can stay connected to their social network. I'll be interested to see if Microsoft's Kin experiences strong sales in the coming months. I suspect it won't. --Sue
P.S. I'm saddened to report that long-time wireless industry consulting firm The Shosteck Group will be shuttering its doors at the end of May. Founder Herschel Shosteck, who passed away from a long illness in August 2008, is often referred to as the "first" wireless industry analyst. He started the consulting firm in 1969. His long-time colleague and CEO of the firm, Jane Zweig, plans to continue to consult in the wireless industry.