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Verizon Wireless CEO Lowell McAdam  (Source: Associated Press)
Verizon CEO kicks customers in the gut when it comes to LTE data

Most of us take our smartphone's "unlimited" 3G data plans for granted. We pay the $30 data fee (in addition to the charge for monthly minutes) and surf away with little regard for data overage charges. We do this because using a smartphone in normal day-to-day duties rarely would consume gigabytes of data within a month which would tip off wireless providers like AT&T and Verizon.

Those who tether, however, be it through unauthorized means like jailbreaking on the iPhone or through officially sanctioned tethering data plans, can find it easy to consume gigabytes worth of data in a month. This comes from people tethering their notebooks and other internet-capable devices to the phone which make sucking down copious amounts of data easy.

With this in mind, Verizon appears to be taking a preemptive step to curb users who consume large amounts of data. According to the Financial Times, Verizon wants to put in place a tiered pricing strategy for LTE (4G) data plans. What makes this move even more puzzling to potential customers is that Verizon Wireless CEO Lowell McAdam recently stated that the cost of carrying 1MB of data over its upcoming LTE wireless network will be "half to one-third the cost" of Verizon's existing EVDO network.

What is even more interesting is that Lowell stated, “I expect people will have four or five or perhaps even more devices they will connect to the network” -- but he went on to say that these same customers would prefer to buy "buckets" of data by the MB for this usage scenario.

For most people connecting four or more devices, conventional wisdom would say that they would want an unlimited plan to avoid overage charges; but perhaps Lowell knows something about Verizon customers that we don't.

Lowell went on to add that his company will have three to five handsets next year that will work on its LTE data networks. Verizon Wireless also expects to switch over to LTE voice traffic by 2012.

Sprint, which is offering competing 4G data coverage via WiMAX, is launching its HTC EVO 4G smartphone early next month. That phone will come with attached with an unlimited 4G data plan, albeit with a $10 higher price tag (per month) than what most customers are used to for their current 3G data plans.

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lower cost structure
By fic2 on 5/27/2010 2:54:11 PM , Rating: 5
Yet another industry that is able to lower their cost structure through new tech, but wants to raise pricing at the same time for people that use it. Pretty much like the banks did with ATMs.

RE: lower cost structure
By mcnabney on 5/27/2010 4:12:56 PM , Rating: 3
I actually think this is the industry acknowledging that in a short while there will be only data. No minutes. No texts. Just megabytes.

I expect that they will bucket them something like this:
up to 250MB/mo $39.99
250-1GB/mo $59.99
1-5GB/mo $79.99
5-10GB/mo $99.99
10-15GB/mo $119.99

RE: lower cost structure
By keith524 on 5/27/2010 4:30:46 PM , Rating: 3
I doubt they would set the usage amounts that low. What most people here seem to be forgetting is that the current "unlimited" plans are not unlimited. The current $30 unlimited plan is really 5GB of unlimited data :P.

My guess would be they will keep the base cost at $30 and lower the data to 2GB. Then offer larger options from there. At the same time they will start allowing more phones to tether and work as wi-fi hotspots to encourage people to use more than 2GB and increase their allowance.

RE: lower cost structure
By mcnabney on 5/27/2010 11:20:05 PM , Rating: 2
Remember, that $30 is on top of some type of voice plan, so profit centers are going to be shifted around.

And the wireless company don't really want to cater to the minimum usage. Prepaid will remain for the true casual user.

And just to contrast, VoIP is typically 64kb/64kb per second. Or 8KB+8KB/sec or about one MB combined per minute. So a GB will be 1000 minutes. So my prior guess isn't too far off. I am also wondering how MTM will work when it is MBs only. A lot of those family shares burn a ton of minutes. Now imagine that you are paying for all of the MBs on both sides of the conversation. I would be surprised if buckets don't go all the way up to 50 for a family share.

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