Hook, Line, and S(t)inker
I originally posted this on my blog, but felt that I should post it here. I used to sell verizon for the better part of Three years, going through the end of unlimited data, the "premium messaging device" monthly fee, the advent of the upgrade fee, etc. Verizon's new changes WILL save some customers some money, initially, but the only reason Verizon's doing it is because they know they'll be cashing in big soon enough.
- - - Today, Verizon announced upcoming sweeping changes to their family plans, doing away with “Talk&Text” and replacing it with “Share Everything” plans. The way they’ll explain it to you in stores is that now you don’t have to buy all that “extra data” to enjoy a smartphone, that unlimited minutes and texting are now baseline, and a whole host of other bullet points that should be hitting the inboxes of sales reps sometime in the next week or so.
Data “buckets” are something that the tech community has asked for since the original iPhone (and innovations in 3g/4g technology) made surfing the web from your smartphone more than just viewing black text on a white low-resolution screen. Data Buckets would mean you only had to buy ONE data plan, where currently you have to buy a separate one for each account. Make no mistake, this is the pitch Verizon will use. But there’s a problem with their “solution.”
In the end, it means we’ll all be paying far more for less content.
The plans are radically different from anything currently offered by a major US Carrier, so if you are a Verizon customer, I suggest you go to their website and check them out here.
For this article, I’m going to assume that at least one of the lines on the account is a smartphone since in a few years every phone will be a smartphone (more on that later). For each smartphone you want to have on your plan, the cost is $40. What does that get you? Unlimited Minutes and Unlimited Text. For single lines this USED to cost $70, so they are giving you a bit of savings there. Now, for each feature phone you want to add, you pay $30 a month. Remember, all this gets you is unlimited Voice and Text Messaging.
Now you get to the Data portion. Remember, smartphones REQUIRE a data plan of some form, so you have to put something on there. The plans are as follows:
$50 for 1GB of Shared Data ($50/GB)
$60 for 2GB of Shared Data ($30/GB)
$70 for 4GB of Shared Data ($17.50/GB ) <–This is the closest per GB cost to current tiers
$80 for 6GB of Shared Data ($13.34/GB)
$90 for 8GB of Shared Data ($11.25/GB)
$100 for 10GB of Shared Data ($10/GB)
$15/GB Overage Fee if you go over your plan (This is $5/GB more than current tiers)
So let’s look at my family’s plan as an example. We have 5 phones, 3 of which are currently smartphones (and another who is looking to upgrade, so let’s assume 4). Right now, we’re on the Nationwide Talk and Text 1400 plan. So $110 (first phone)+ $40 (9.99 per extra line)+ $120 (30×4 for data) and you’re looking at $270 a month if my brother upgrades before the new plans go into effect. The way I understand it, if he upgrades AFTER, we’ll all have to switch to the new plans, though documentation is a bit unclear on this. The biggest change here is that three of our lines will go from unlimited data for $30 a month onto the new Bucket plans.
Two of the phones use around 2GB a month, and the other uses 1Gb a month. I don’t know how much my other brother will use, but let’s play it safe and assume he’ll use 2GB since he’s a college student and loves streaming video and audio already. This means we’re looking at 7GB, so the closest plan for us is the $8GB plan. So $160 (4 smartphones at $40) + $30 (my mom is still on a feature phone) + $90 for the data. You’re looking at $280 under the new plan.
So at minimum, we would have to pay $10 a month more under the new plan but three of our lines would have to give up unlimited data to gain “unlimited” minutes (we only use 900 or so currently). But that’s assuming our data usage patterns will remain the same, and everyone (especially Verizon) knows that this isn’t the case.
One other change with the plans is that the monthly “gap” between owning a basic phone and upgrading to a smartphone just got a lot smarter. Before this, adding a smartphone to a family plan meant an additional $30 for each Droid/iOS device you added. Now, if your plan already has a smartphone, it will only cost $10 a month more. You can bet this will be part of every sales pitch going forward. ”Why get that Samsung Intensity 5 when for $10 a month more you can get the new Iphone and update facebook on the go? If the customer is savvy enough to bring up the cost of going over, the rep will have graphs showing how the average consumer only consumes around half a gig of data a month, so for 4 phones, you’ll only need the $4GB plan (look for this to become the new “baseline” plan).
It also won’t surpise me if the number of decent “feature” phones continues to drop. Three years ago Samsung, LG, and Motorola all offered at least 2 feature phones for the potential verizon customer, now that number has dwindled and the quality of the phone’s has (in many ways) reversed, particularly with “messaging” devices. Within two years, I don’t see Verizon (or any company) selling ANY featurephones besides for those tailored to either the very old or the very young. For anyone from 14-60, getting a smartphone will just make more sense.. and at only $10 a month more, it will be spun as a “great value.”
It’s a safe bet that Verizon will be pushing the “unlimited calling” facet of their plans heavily once the marketing begins as well. As a culture, we’ve proven time and again that we’re addicted to the term “unlimited” even if it means paying more than we really need to. In the nearly three years I spent selling phones, I can count on two hands the number of accounts I saw that actually required unlimited calling but I saw (and activated) hundreds of phones on unlimited plans because the customer demanded that they needed one. How many people will switch off of their current plans JUST for the unlimited talking alone?
Verizon will spin this as giving you more control over your data while they “upgrade” your basic account to unlimited calling (and texting), and a lot of customers will fall for it. For a surprising number of them, it could even lead to short term savings.
So now you have an ever increasing number of new consumers with shiny iPhone 5′s, Galaxy S3’s, and Droid RAZR HD’s and they love it. Whether it’s Netflix, Pandora, or “free” GPS, every customer will find something about their new phone that they love. One of the great things about smartphones is that there is something for everyone. It’s rare that a customer will “downgrade” after getting used to the features a connected device offers.
By 2013, Verizon claims it will have their entire 3G footprint covered by their blazing fast LTE network. LTE is a huge step up from 3G and makes streaming services such as Netflix useable, and the high-res screens on modern phones will make watching a movie on the go “make sense” and far less geeky than it used to be.
Apple, Samsung, and HTC all also offer wireless streaming options for their devices, allowing you to watch that HD Netflix movie on your big screen without messing with wires. Apple is the best at doing this with their seamless airplay tech, but even DLNA streaming is easy enough for most users to figure it out. Look for this technology to become increasingly seamless with each product refresh.
Verizon also dropped the cost of adding a “tablet” to your plan from $20 minimum to $10. I expect that the pitch will go something like this:
Sales Rep: “Did you see the new iPad announcement? It’s it amazing how fast tech is moving?”
Customer: “Yeah, I was thinking about picking one up over at the Apple Store later.”
Sales Rep: “Well did you know that for the same price you’d pay for the new iPad, you can get one through our store and use your ShareEverything Data to access the internet everywhere?”
Customer: “How much is that?”
Sales Rep: “It’s only $10 a month, and you get the same iPad experience, but everywhere you go!”
Only $10 a month. Ten seems to be the magical number. Stay at or below it and something is a “value.” but if you go even a few dollars over it and suddenly the price is expensive. And it is a great deal, at least on paper. I expect that new Tablet costs will be (on contract) only slightly less than the Wifi only models, but with the added benefit of data connection.
From the start, Verizon’s big push with LTE is how much easier it becomes to access data. With these new plans, old “extras” like Tethering are now included, and the promise of internet everywhere is quickly becoming a reality. Now, with apps like Viewdini, Verizon is making it easier to access high bandwidth content on your mobile devices. Expect this trend to continue because now that Verizon (and soon to follow ATT) have people on limited data plans, they’ll want to get you on the highest “bucket” possible.
Right now, these plans will actually give a lot of customers a cheaper way to get the phone they want over current plans. The “jump” between their boring featurephone and the one that will let them play angry birds is now just over $2 a week. Getting a tablet that will let you online in the middle of your camping trip just a mere $10 a month, and an ever increasing number of services built to let you see what you want, when you want it, on a network that’s faster than many home connections.
Fast Forward a few years and the mobile landscape will look very different. I don’t think we’ll see featurephones on contract plans for much longer. There is very little profit for the carrier’s, and technology like Voice over LTE will make even “using a phone as a phone” easier to do on a smartphone than it is now. The idea of having your laptop or tablet hooked up to a data plan will become the norm as “free wifi” is phased out in favor of 4G “Hotspots.” The average user will see their data usage increase because they’re using their phones for more than they possibly could have imagined. (or that I could even predict).
With the high limit of 10 devices per data account, it’s not a stretch to assume that in a few years time a lot of those former featurephone users will see themselves eyeing the $100 plan and cursing themselves as they hand over the money to Verizon. Introducing the plans today was a BRILLIANT move on Verizon’s part because it we’re at the point now where the tech is still “cool” and not commonplace so people don’t really understand just what they’re getting themselves into. By offering a savings today, Verizon is betting that their users data habits will skyrocket in the years to come, which is a rather safe bet if you see the trend the internet is following.
So what’s the alternative? Verizon’s the first company to switch to this data bucket plan, but expect all other major carriers to make similar shifts soon. Prepaid options are improving everyday, but they’re still a long way off from reaching parity to contract offerings. If you remain with your current phone (or pay full price for a replacement) you should be able to keep your current plan for quite a while, and if you need to have verizon, this is most likely your best bet.
This change isn’t unexpected, it’s not even particularly surprising because carriers will do whatever they can to get higher profits from their users, and as long as the average user doesn’t see the “big picture” there’s little help from change. If you want to try and make a real difference, educate yourself about your options and ask yourself “why is the carrier offering me this?” Remember that the answer can always be boiled down to “they think it will make them more money,” and choose accordingly.