Verizon Wireless offers relief on data caps

Verizon Wireless will begin selling a device from Novatel Wireless that allows mobile users to connect multiple devices to a 3G connection. Called the MiFi 2200 Intelligent Mobile Hotspot, the device uses Verizon's EV-DO Rev. A network to create a personal WiFi cloud that can connect up to five WiFi-enabled devices.

The product appears to be a way for Verizon to keep devices on its 3G network rather than accessing public WiFi hotspots. Verizon Wireless acknowledges that WiFi is becoming a critical feature in many smartphones, so it had to address the issue, and did so with a product that no other operator in the U.S. is yet offering.

But what is most interesting is the operator's move to drop its overage fees for its $60 and $40 mobile broadband plans, from $.25 per megabit to $0.05/MB and $0.10/MB. And the $40 plan has seen its data usage limit increase from 50 MB to 250 MB.

Does Verizon Wireless' move solve the data-cap conundrum I've talked about in the past? I'd say with this change, the industry is getting there. I've discussed at length the fact that consumers have a difficult time understanding how many megabits it takes to view Web pages or run videos. It's not the same as watching the minutes go by while chatting on the phone. This discussion, of course, was spurred by lawsuit filed by Billie Parks on behalf of herself and others against AT&T Mobility and RadioShack after she purchased a $100 netbook at a RadioShack bundled with a two-year data contract from AT&T. Her first bill was more than $5,000.

Current Analysis analysts William Ho and Kathryn Weldon said in a research note that Verizon Wireless' data plan changes "will certainly influence AT&T to rethink and likely move on its own data overage fees and its $39.99 Data connect plan usage limit to match." The analysts added that Verizon Wireless' data plan adjustments "show the carrier is taking a more aggressive stance in laying the groundwork for more data use."

Right now, AT&T is the most punitive when it comes to overage charges, according to research from Current Analysis. For its $40 per month plan, it charges about $1/MB as an overage rate and $0.51/MB for its $60 plan. Meanwhile, Sprint has historically had the lowest overage rate, $0.05/MB for its $60 plan. Verizon Wireless' adjustments have implications for both operators. --Lynnette