Verizon Wireless (NYSE: VZ) is taking flak for a posting on its website written by industry analyst Jack Gold that suggests customers do not want or need unlimited data plans.
Verizon and AT&T Mobility (NYSE: T) do not offer unlimited data plans to new customers. Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) still offer unlimited plans but they throttle customers' speeds in specific circumstances.
"The quality of connection is important to wireless users, and when connections become slow or disconnections occur due to overcrowding, users become disappointed," Gold, president of J. Gold Associates, wrote in a blog post on Friday. "Let's face it, if everyone had unlimited data and used it fully, the performance of the networks would suffer because of bandwidth restrictions and the 'shared resource' nature of wireless. The bottom line is: users agree that degrading the networks is something that they don't want to happen."
Gold wrote that slower networks would push carriers to upgrade their networks to increase capacity. "Much like highways that need to be widened for peak rush-hour traffic, this would require major investments that someone would have to pay for--that someone being the subscribers," Gold wrote. "In the case of highways, we often see this as tolls implemented to pay for the upkeep of roads. Wireless would follow a similar model. Carriers are continuously investing to improve their networks, but concentrating on overall quality improvements is ultimately in the best interest of all users, unlike simply adding capacity to accommodate those who use the most data. The additional expense required for the latter would be passed on to normal users, who would have to pay for something they don't need."
Writing in BGR, Brad Reed commented that Gold's analogy to highways is "ridiculous." He wrote: "If subscribers were really that fearful of price increases then they should have been begging Verizon to never upgrade from 3G to 4G. After all, the upgrade to LTE was a major investment and according to Gold, major investments are something wireless users should be fearful of."
In the blog post, Gold added most consumers likely will continue using high-bandwidth applications over Wi-Fi and not cellular networks. He cited data from a Mobidia Technology study released in November 2014 that found that users on Android phones consumed 6.8 GB of Wi-Fi data and those with iPhones consumed 8.9 GB of Wi-Fi data per month.
"This shows a strong correlation with users accessing Wi-Fi for high data uses. Nevertheless, even if we combined mobile and Wi-Fi data usage, we'd find that the vast majority of users would still be within the allotments of data plans available from the carriers at a reasonable cost, particularly if it's a multi-device shared family plan," he wrote. "In most cases, users are very well served by current wireless data plans, and really don't require more."
Verizon, like other carriers, charges customers based upon how much data they use. The company years ago discontinued offering unlimited data options.
Gold wrote that "while unlimited data may sound attractive, there is no practical effect of data limits on the majority of users. Understanding this should bring rationality to a discussion that is often held on a 'gut feeling' level. Keeping adequate speed and performance while allowing all users to share the limited commodity we call wireless data is the fair way to deal with wireless connectivity. And ultimately, that is what is beneficial for wireless consumers."
BGR's Reed noted that "of course, this commodity is only as 'limited' as it is because Verizon has placed its own arbitrary limits on it."
In response to the blog post, T-Mobile CEO John Legere wrote on Twitter: "If you don't want #unlimited data, go to @VerizonWireless. If you DO want unlimited (or any) #data – we've got you."
Verizon spokeswoman Debi Lewis said the post speaks for itself. "We've had a number of third-party, non-Verizon folks including respected industry analysts contribute to our News Center to offer their opinions and generate healthy conversations about topics of interest in the wireless industry--which is a good thing," she told FierceWireless. "And, as the disclaimer says, 'The thoughts, opinions and suggestions of the author may not necessarily reflect those of Verizon Wireless.'"
Last fall Verizon abandoned plans to throttle the data speeds of customers who are on legacy unlimited data plans who crossed into 5 percent of data users on Verizon's LTE network when they are on high-traffic cell sites.
The company had announced the change to its "network optimization" policy in late July 2014, saying it would include LTE users and not just customers its 3G CDMA network. The policy change was sharply criticized by FCC Chairman Tom Wheeler and public interest groups.
For more:
- see this Verizon blog post
- see this DSL Reports article
- see this BGR article
- see this Ars Technica article
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