Verizon Communications (NYSE:VZ) executives are intimating that Verizon Wireless may charge LTE customers in tiers based on their data speeds in addition to their data consumption, a scenario similar to plans offered by wired Internet service providers. The executives cautioned, however, that the company is still figuring out the right mix of pricing for the next-generation service.
"If you want to pay for less speed, you'll pay for less speed and consume more, or you can pay for high speed and consume less," Verizon CFO Fran Shammo told the Wall Street Journal. Verizon CEO Ivan Seidenberg said the carrier has not committed to a pricing strategy yet.
Verizon has long hinted that it will move to a usage-based pricing structure for LTE, which it plans to launch in 38 markets by year-end. However, it has never discussed using data speeds as a factor in pricing before. Currently, as a holiday promotion, Verizon offers 150 MB of smartphone data for $15 per month on its EVDO network. Importantly, though, Verizon has kept its $30 unlimited data plan, and Seidenberg said he does not think a move to tiered pricing will mean the end of unlimited plans.
"I don't think the world's that simple," he said. "We need to get into it, figure out what the customer thinks is fair, and go from there."
Currently, MetroPCS (NASDAQ:PCS), which offers LTE service in five markets, charges $55 for unlimited voice, texting and LTE data access. Sprint Nextel (NYSE:S), which resells Clearwire's (NASDAQ:CLWR) mobile WiMAX service under the Sprint 4G brand, charges $60 per month for its 3G/4G mobile broadband plan, which has a 5 GB cap on 3G service and unlimited 4G service.
Seidenberg is scheduled to deliver a keynote address at the Consumer Electronics Show in January, and is expected to show off a number of Verizon's LTE devices. He told the Journal that Verizon will launch its first LTE phone in February; previously Verizon said it would offer LTE handsets by May.
The Verizon chief, who is to retire next year, spoke about the highly-charged issue of Verizon's relationship with Apple (NASDAQ:AAPL). He said Verizon's transition to LTE has attracted Apple's attention, and helped the company land Apple's iPad. Multiple reports have indicated that Verizon will launch a CDMA version of the iPhone early next year, which Seidenberg declined to discuss. "If the iPhone comes to us, it's because Apple thinks it's time," he said. "Our interests are beginning to come together more, but they have to take steps to align their technology with ours."
- see this WSJ article (sub. req.)
Verizon introduces tiered 3G data plans
Verizon envisions usage-based model for LTE
Is usage-based pricing inevitable?
Verizon: Metered broadband is on the horizon
Verizon: LTE will bring 5-12 Mbps download speeds