The writing’s been on the wall for months. Verizon has been steadily losing customers to rivals and it had to do something. Will the new price plans announced on Tuesday be enough to drag it out of the doldrums?
Speaking at the MoffettNathanson investor conference on Tuesday, Verizon EVP and Consumer Group CEO Sowmyanarayan Sampath said it’s a next-generation plan that “fundamentally changes how wireless is bought in this country today.” It’s based on research that shows what customers want most are flexibility, control and more value, he said.
“We said, you know what, we are going to give them 100% of all three of them. And we came up with myPlan,” he said.
Verizon’s new plans essentially give consumers the choice of one of two network options: basic or advanced. The basic plan, called Welcome Unlimited, uses the low-band, nationwide 5G network. The more advanced plan, Unlimited Plus, offers access to the mid-band and millimeter wave (mmWave) spectrum that Verizon calls Ultra Wideband.
The Unlimited Plus costs $80/line for one line; the Unlimited Welcome starts at $65/line for a single line. The cost of a line goes down as more lines are added. For example, it’s $55/line for three lines on the Unlimited Plus plan and $40/line for three lines on the Unlimited Welcome plan.
Once the customer chooses which network plan they want, they can pick the perks they want. Each perk is $10, and they can choose from Disney+, Apple TV, Walmart+ and others. Sampath suggested a typical family might end up saving $50 every month just on the mix of perks that Verizon offers. The perks are exclusive to Verizon, he said.
Industry analyst Avi Greengart, president of Techsponential, said Verizon’s new plans are unique.
“Everyone is offering a bundle of services, but Verizon is letting you pick and choose and change exactly what you’re getting in your bundle every month,” he told Fierce via email.
Is it a better deal? That depends. “The fact that Verizon is allowing so much customization means that in some cases, you’ll be paying Verizon more, in some cases, you’ll be paying less. However, you’re more likely to want the services that are on your bill than in the past,” Greengart said.
T-Mobile announced its Go5G plans last month. Billed as its latest “un-carrier” move, T-Mobile characteristically blasted AT&T and Verizon for jacking up prices and said T-Mobile was offering “great device deals” that are upgrade-ready every two years.
Verizon’s announcement this week might answer some of those “un-carrier” moves, but components of Verizon’s new plans clearly have been in the works for some time.
Greengart said that Verizon has been negotiating with content companies for years to build mix & match and then +play; the myPlan perk deals are likely a beneficiary of that groundwork.
“Some of the perks are better deals than others,” he said. “The Apple and Disney deals are quite strong, while Walmart+ is less expensive on a monthly basis, but it can be purchased for less if you buy a $98 annual subscription direct from Walmart.”
During the MoffettNathanson conference today, T-Mobile CFO Peter Osvaldik didn’t have a lot to say about Verizon’s new plans, other than “good luck to them” and that T-Mobile has always been the beneficiary when new plans come out that get people thinking about changing plans or switching carriers.
ARPA, net add accretive
It’s noteworthy that Verizon believes the new myPlan is going to be ARPA accretive over time, said Bill Ho, principal analyst at 556 Ventures. Sampath also said during Tuesday’s MoffettNathanson event that it’s going to be net add accretive for Verizon over time.
“They’re framing it in the scope of simplicity,” Ho said. “You’ve got two major plans you can choose from,” and you can tweak every month at will. “That’s kind of the ultimate choice,” but for a lot of people, it’s a chore unless you’re really engaged in that every month.
Verizon said customers can stick with their existing plans; there’s no forced migration to the new plans. “If you love the kitchen sink, you’d probably stay with the old plan. If you only wanted certain things, then this is good for you. So it really depends on the consumer actively saying, ‘This is better for me,’ versus staying on the old plan,” Ho said.
Enough momentum?
Sampath, who took over the Consumer Group in March, said the new plans are designed to help Verizon get momentum back in its business. Of course, whether it’s enough to turn the ship around remains to be seen.
Just this week, reports emerged that Diego Scotti, chief marketing officer at Verizon the past eight years, is leaving the company. It follows a string of executive departures and changes in recent quarters.
“It looks disconcerting because a lot of executive changes are happening seemingly all at once,” Ho said, adding there may be different reasons for individuals’ departures. But taken together, it’s not necessarily a good look.
Verizon CEO Hans Vestberg, who’s been at the helm since 2018, told the Wall Street Journal earlier this year that he would run the company as long as he has the support of the stakeholders.
Verizon shares have fallen about 26% while the S&P 500 index increased about 41% over the same time, the WSJ noted.
Unless it’s a board that is “all pro-Hans,” this could be the make-or-break year for Vestberg. “He had a long runway as CEO already,” Ho said. “This could be a year where the rubber meets the road for Hans.”