Verizon Wireless has announced its much-anticipated share plans, and has effectively bridged the two opposing options of sharing across device types while also appeasing the needs of the family unit. And, even more significantly, the company has commoditized voice plans down to a single, unlimited offering.
The move to unlimited voice is not unexpected and is a key step to protecting revenue in a declining field (younger consumers focus far less on voice calls). However, the price point is significant: at $40 per smartphone user, the unlimited voice is at what used to be the voice entry point. Just a couple of years ago, voice plans started at $40 for 400 minutes.
Voice plans are not the only simplification in the Verizon strategy: the price point also includes unlimited messaging, which was typically a $20-$30 add on (depending on if it was single user or family messaging). In other words, Verizon has reduced the confusing array of add-ons that were effectively (almost) mandatory in the old scheme.
And now the important part: the plans offer the ability to share pools of data across an array of devices ranging from a gaggle of smartphones, to a range of connected devices such as smartphones, notebooks and so on. Step one is to pick the devices that you wish to include (up to 10), with each type of device costing a set monthly fee (smartphones $40, tablets $10, mobile hotspots $20). Step two is to select the pool of data that you wish to use, ranging from 1GB up to 10GB.
The pricing of data, at first blush, appears expensive (1GB for $50, 2GB for $60). Compare this to the individual data plan pricing currently available where 2GB of data is $30 (half the price). However, one must remember that the data is now shared, which provides more value, and must also be considered in the greater scheme of the voice and messaging components. Consider the following example of a family of three people, all with smartphones:
In addition to the $20 saving, there are two other ways that the plan can work to a consumer’s advantage. They can add more devices (such as a tablet for an additional $10) to leverage the same pool of data; they can also consumer less data. 6 GB may be more than the family needs at this point, but is the collective amount that they had to purchase with the previous individual plans. Potentially, the same family could shave $10 off this monthly amount, dropping down to the 4GB plan. Will they? Probably not. Instead, they are more likely to take the first option of looking to add more devices over time.
And talking of adding more devices, the above smartphone plans also offer unlimited mobile hotspot without an additional fee. This is a very smart move: we see mobile hotspotting (using the smartphone as hotspot for other devices) as an option for occasional use only. Once it becomes more common behavior, the drain on battery life makes the $10 tablet addition (or whatever the device is that the consumer is connecting) begins to make sense. In other words, the mobile hotspot option allows consumers to test the idea of a mobile broadband connection before making it common, regular practice.
There are still challenges that face the new Verizon plan. Not least is the fact that many tablets now in use do not include a cellular modem, never mind a specific LTE modem. Further, the majority of tablet use remains firmly ensconced in the home, not on the road. However, the plans enable a change in consumer behavior that may be inevitable and if the plans did not change, the consumer behavior never would have.
So now, all eyes are on the other carriers. AT&T has often commented on its willingness to embrace these plans too and it will need to react quickly. The reaction should be judged in a matter of days, not weeks and if the carrier is truly prepared we’ll see a response before the weekend.