Verizon expands 'network optimization' policy to LTE customers with unlimited data plans

Starting in the fourth quarter, Verizon Wireless (NYSE: VZ) customers who still have legacy unlimited data plans who cross into the top 5 percent of data users on Verizon's LTE network could see their speeds slowed when they are on high-traffic cell sites.

Verizon already employs a network optimization policy on its 3G CDMA network, and in the fourth quarter the carrier will extend that to its LTE network. The carrier said the move likely will only affect a small subset of its subscribers. Verizon first implemented the network optimization policy for 3G smartphone customers in the fall of 2011.

To cross into the top 5 percent of LTE data users, Verizon said customers will need to use roughly 4.7 GB of data on a device during a billing cycle. However, that threshold is likely to go up over time as more customers use more data via LTE.

If customers do cross that threshold, they will be marked as a customer that can have their speeds slowed for the rest of the customer's billing cycle and next billing cycle. However, that will only happen when a marked customer is connected to a cell site that is "highly utilized." In those cases, marked customers using high-bandwidth applications like video streaming could have their speeds slowed.

Verizon emphasized that the optimization policy is applicable only to customers with grandfathered unlimited data plans and who have fulfilled their minimum contract, and not customers on usage-based plans or More Everything shared data plans. Verizon introduced usage-based pricing in July 2011.

A Verizon spokesman declined to say what percentage of the carrier's customer base still has an unlimited data plan, but told FierceWireless it was not a big percentage. The carrier this week said 55 percent of its postpaid customers are on More Everything shared data plans, and there is presumably a large chunk of the remaining subscriber base that is on usage-based pricing but not a shared data plan.

AT&T Mobility (NYSE: T), which introduced usage-based data pricing in June 2010, more than a year before Verizon, disclosed this week that 80 percent of its postpaid smartphone subscribers are on usage-based data plans (either tiered or Mobile Share shared data plans), compared to about 70 percent a year ago.

Verizon said its goal is to make sure someone who has unlimited data doesn't get to negatively affect the network experience of other users. Some activities do not use that much data while others burn through it in big chunks. For example, according to Verizon, sending 3,000 emails is only 29 MB and 450 minutes of GPS navigation only uses 37 MB of data, but uploading 300 photos would consume 900 MB and 150 minutes of video chatting would consume 1.7 GB.

Verizon made the decision to bring network optimization technology to its LTE network within the last several months, but a spokesman said it is not related to the overall capacity on the carrier's network. Verizon said that fully 76 percent of its total wireless network traffic now travels of its LTE network.

Other carriers have more blunt throttling policies. AT&T said in 2012 it would throttle the speeds of customers with unlimited data plans after 3 GB of usage on its HSPA network and after 5 GB on its LTE network. The speeds are slowed for the rest of the customers' billing cycle.

On T-Mobile US' (NYSE:TMUS) Simple Choice plans, once a customer has used all of the LTE data included in their plan, their data speeds are automatically slowed to 2G speeds for the remainder of their billing cycle. The exception is T-Mobile's $80 per month unlimited plan. On Sprint's postpaid service, the carrier notes that for its Unlimited, My Way or My All-in plans that "other plans may receive prioritized bandwidth availability" and that "streaming video speeds may be limited to 1 Mbps."

For more:
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Verizon's network optimization policy is about pricing as much as the network 
Verizon begins limiting bandwidth of heavy 3G smartphone data users

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