Verizon Wireless' (NYSE:VZ) Share Everything shared data plans caused some confusion and consternation when they were introduced in late June, but the operator will likely be rewarded from the plans when it reports third-quarter earnings tomorrow.
The plans, which went into effect June 28 for new customers, could boost Verizon's average revenue per user by 3.5 percent compared to the year-ago period, according to analyst estimates cited by Bloomberg. The pricing strategy could mean that some individual customers are paying higher bills than they otherwise might have. The Bloomberg report said the new plans likely did not impact Verizon's subscriber growth, with the carrier expected to add around 1 million new postpaid customers in the third quarter.
The biggest change for Verizon though will likely be in its financial metrics, which are expected to get a boost as more new customers are forced to adopt the Share Everything pricing scheme. "The biggest impact would be on penny-pinching consumers who used to go for the $70 Verizon smartphone plan," Alekstra Oy, analyst Tero Kuittinen told Bloomberg. "Verizon slammed the door on these people and hiked the minimum plan price to $90. The gap between the cheapest possible Verizon smartphone plan and the budget carriers' plans is suddenly a lot wider than it used to be."
All of the Share Everything plans include unlimited voice minutes, unlimited text, video and picture messaging and a single data allowance for up to 10 Verizon devices. In addition, the carrier's Mobile Hotspot service on all the devices is included in the Share Everything plans at no additional charge. Customers are free to keep their existing plans, but there is no fee or contract extension to move to the new Share Everything plans. Customers pay a per device connection fee per month ($40 for smartphones and $10 for tablets, for example), and then pay for data on a usage-based scale.
Verizon has said that customers who were grandfathered into its unlimited data plans and want to upgrade to a new smartphone at a subsidized price will need to pick a voice plan with a standalone data package or one of its Share Everything shared data plans. Verizon has said it has been pleased with the adoption of Share Everything plans so far.
AT&T Mobility (NYSE:T) introduced shared data plans, dubbed Mobile Share, on Aug. 23, though it made the plans optional for both new and existing customers. AT&T CEO Randall Stephenson said at an investor conference in September that customers were buying more of the higher data buckets of shared plans that AT&T had initially expected.
Sprint Nextel (NYSE:S) and T-Mobile USA have knocked the shared data plans as too expensive and confusing for consumers. Both carriers still offer unlimited smartphone data plan options.
While Verizon may get a financial lift in the third quarter, analysts caution there is a limit to how high they can push data prices. "There's a finite amount of consumer discretionary money," Cowen & Co analyst Colby Synesael told Bloomberg. "The growth rates on service plans won't go on forever."
For more:
- see this Bloomberg article
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