Verizon Lowers Wireless Plan Prices, Pressuring AT&T

[rdowns]

This is great news.

NEW YORK (Dow Jones)--Verizon Wireless introduced lower wireless pricing plans Friday, a move that's likely to force rival AT&T Inc. (T) to follow and could pressure margins on the carriers' high-end business.

Verizon Wireless, owned by Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD), slashed pricing on some of its contract plans, dropping its nationwide unlimited voice plan to $69.99 a month from $99 and offering a nationwide unlimited voice-and-text plan for $89.99.

The company's nationwide unlimited family plans will be $119.99, and an unlimited family voice-and-text plan will be $149.99. Family plans' base pricing is for two lines.

Verizon also announced new plans in its prepaid segment--a white-hot area of growth in the wireless industry--offering non-contract options at $5 more a month than comparable contract plans. An unlimited voice plan will be $74.99 a month and unlimited voice and text will cost $94.99. The 450- and 900-minute prepaid plans also will be $5 more a month than their corresponding post-paid plans.

The new plans will be available Monday. The new pricing won't affect existing customer contracts, although customers may choose to switch to any of the new plans without penalty or contract extension.

Shares of Verizon fell 0.7% to $31 in premarket trading.

"We expect AT&T to follow quickly," Macquarie analyst Phil Cusick said before the announcement, predicting Verizon would lower prices. He noted that last year, when Verizon moved the plans to $99, AT&T followed suit a few hours later.

Officials from AT&T were unavailable for comment.

It's unlikely Sprint Nextel Corp. (S) or Deutsche Telekom AG's (DT) T-Mobile would respond because their prices are already $20 or more lower, the analyst added.

Cusick said cuts by Verizon Wireless are likely to have an impact on 5% to 10% of the company's higher-paying subscribers, but the loss in revenue could be offset by customers in lower-priced plans moving up, attracted by the better value.

When the $99 plans were announced last year, AT&T and Verizon said only 1% to 2% of subscribers paid more, Cusick noted. "The bigger concern is that [Verizon], fresh off a strong quarter, is choosing to attack AT&T for dominance in the slowing" market for monthly contract plans, he added.

Separately, in an interview last week with MarketWatch, Verizon Communications' Chief Technology Officer Dick Lynch said wireless companies will eventually have to change how they bill customers, charging them for how much "bandwidth" they use to prevent networks from getting clogged up. Lynch said current data plans, which allow unlimited Internet access for a flat monthly fee, encourage overuse of wireless networks, mainly by a small number of "bandwidth hogs," or individuals who send and receive lots of large files.

Yet, in that interview, Lynch said the company had no immediate plans to change how it bills customers.

Link

 

[rhett7660]

Snip

Separately, in an interview last week with MarketWatch, Verizon Communications' Chief Technology Officer Dick Lynch said wireless companies will eventually have to change how they bill customers, charging them for how much "bandwidth" they use to prevent networks from getting clogged up. Lynch said current data plans, which allow unlimited Internet access for a flat monthly fee, encourage overuse of wireless networks, mainly by a small number of "bandwidth hogs," or individuals who send and receive lots of large files.

This is the only thing I don't want to happen. I use a lot of bandwidth just because I am on it a lot. Not because I receive and or download a lot of files. Mainly sites. I hope this doesn't effect me to much or the limits are set pretty high.

I do hope AT&T follows and lowers their prices also! That would be a good thing.

 

[Rodimus Prime]

Not low enough yet. I want to see them lower the cost of data down. Like to 40 a month to unlimited family smart phone data would be great.

 

[maflynn]

So people want lower prices and unlimited bandwidth? I see the need to have a tiered approach. Heavy users should pay more then light users. Its not an infinite resource

 

[rhett7660]

So people want lower prices and unlimited bandwidth? I see the need to have a tiered approach. Heavy users should pay more then light users. Its not an infinite resource

I never said they shouldn't (just stating for the record) , I just hope they don't screw the pooch so to say and make the limits so low that it becomes rediculas to use the data attached to the phone.

 

[lefooey]

Maybe I'm misreading the new pricing, but it more looks like a "shift" rather than a discount.

They've lowered the price of their unlimited plan by $10, but then added a mandatory $10 charge to significantly more popular handsets.

 

[jav6454]

Maybe I'm misreading the new pricing, but it more looks like a "shift" rather than a discount.

They've lowered the price of their unlimited plan by $10, but then added a mandatory $10 charge to significantly more popular handsets.

That and the higher ETF fees. They aren't loosing money, they are just being smart on where to charge.

That said, even if AT&T follows, AT&T will still have the upper hand due to Rollover from AT&T. It's great to know that if you overuse your minutes, you have last month's unused minutes to save you.

 

[Nermal]

I never said they shouldn't (just stating for the record) , I just hope they don't screw the pooch so to say and make the limits so low that it becomes rediculas to use the data attached to the phone.

My carrier in NZ currently has 500 MB (US$22/month), 2 GB ($37) and 8 GB ($51) tiers. I expect that US prices will be a bit cheaper since you typically don't use as much international bandwidth.

 

[rhett7660]

Looks like AT&T responded..... see front page here at MacRumors...

 

[FX120]

Still doesn't beat my comfy Sprint plan, $39.99 for 550 anytime minutes + $6.75 for unlimited data and texting...

Too bad the bastards won't let me upgrade to a decent phone and keep my contract.