Verizon Doing Away With Minutes, Switching to Shared Data Plan
David Goldman, CNNMoney, Reporting
NEW YORK — As the number of smartphones, tablets and connected gizmos per household explodes, the way you pay for all those gadgets is about to change dramatically.
Verizon Wireless on Tuesday announced its new “Share Everything” plan, allowing customers to share data allotments across multiple devices. Starting June 28, individuals and families will be able to buy one data plan encompassing all of their smartphones, feature phones, tablets, netbooks, USB modems and Mi-Fi devices.
That means some customers — particularly those on low-priced plans who don’t have multiple devices — are going to have to pay more.
As part of its revised pricing structure, Verizon gave tiered voice and texting plans the boot. All plans now have unlimited voice and texts. That makes the monthly data allotment (and the number of devices they choose to connect) the only measure that customers can control to raise or lower their monthly bill.
Here’s how it works: An individual user with a smartphone and an iPad would be able to choose a data allotment — say 4 GB per month — and every download on every device would count against that shared 4 GB. A family of four could buy a plan with 8 GB per month and share that allotment across all their phones and connected gadgets.
That’s a change from the current structure, under which each device comes with its own particular allotment of data that can’t be shared with anything or anyone else on the plan. Verizon’s rivals are expected to follow suit and unveil their own data-sharing plans.
Verizon said this was a much-asked-for feature, as customers who went over their limit on one device but were under it on another were stuck paying overage charges. Wireless companies for years have allowed families to share voice minutes across multiple phones, but this is the first time data has been shareable.
That convenience comes with a higher entry-level price tag.
The cheapest possible monthly bill for a Verizon Wireless smartphone customer will become $90, which includes unlimited data, texts and 1 GB of data. Today, Verizon’s lowest-priced smartphone plan is $70, consisting of 450 voice minutes, no texts and 2 GB of data.
New customers will be forced to choose from one of the new plans, though Verizon said existing customers will be able to hang onto their current plans when they upgrade — for now.
The company has broken its pledges in the past, most notably by forcing customers with legacy unlimited data to switch to tiered data plans when they upgrade their phones. Verizon originally said existing customers would be able to keep their unlimited plans indefinitely.
Verizon spokeswoman Brenda Raney says that “customers are really getting more value” out of the new plans, which is technically true. All that unlimited voice, texting, data and mobile hot spot would cost an individual customer $140 today, which is $50 more than it would cost under the new plan.
But few customers actually use all those features. As data use grows, people are talking on their phones less. They have been scaling back their minutes, and the industry’s voice revenue has fallen dramatically over the past several years.
The average subscriber used just 638 voice minutes per month in 2011, down from 720 minutes in 2010, according to the latest data from PricewaterhouseCoopers. Customers are cutting back their voice plans, sending carriers’ average revenue per smartphone user down to $83 per month last year. That’s a drop from $86 in 2010 and $93 from 2009.
Customers have also increasingly subscribed to Microsoft’s Skype and other voice apps that travel over the data network, as well as unlimited texting apps like Apple’s iMessage, Google Voice and GroupMe.
That’s a problem for Verizon and the rest of the wireless industry, since voice and texting offers a much higher profit margin than data. Voice and texts require a very small amount of bandwidth, as opposed to data, which requires carriers to continuously build up their networks to support exploding demand from smartphones and tablets.
Though Verizon was the first to act, other carriers have been mulling a similar switch to across-the-board unlimited voice minutes to buoy sales, analysts say.
“We expect such pricing changes to be positive for the wireless industry, as the switch would stabilize declining voice revenue,” said Mike McCormack, analyst at Nomura Securities. “The switch will likely … stop the trend of customers stepping down their voice plans whenever they come up for upgrades.”
The beneficiaries of Verizon’s new plans are customers who either use use a lot of voice minutes or have a number of connected devices. Those customers could save a significant amount of money with the new plan, depending on their monthly usage.
Verizon has an online calculator to help existing customers determine if the new set of plans is right for them.