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Verizon mulls tiered pricing for smartphone data

Posted at 18 June 2010 21:33 CEST by Jared Newman

A move by AT&T to limit smartphone data use could become the norm, as Verizon Wireless considers its own tiered pricing plan.

John Killian, Verizon’s chief financial officer, told Bloomberg that the company “will probably need to change the design of our pricing where it will not be totally unlimited, flat rate.” He didn’t get into specifics, but his wording suggests that Verizon will introduce either a cap on bandwidth, multiple data packages at different prices, overage charges or some combination of the three. The move will coincide with Verizon’s launch of 4G phone service later this year.

Earlier this month, AT&T switched to tiered data plans, effective for all new contracts on or after June 7. Gone is the $30 unlimited plan, and in its place is a 200 MB package for $15 per month (plus $15 for another 200 MB) and a 2 GB package for $25 per month (plus $10 for each extra GB).

Killian said Verizon’s smartphone owners use between 600 MB and 800 MB per month, similar to iPhone usage. AT&T described data usage on its network differently: Only 2 percent of its customers use more than 2 GB of data per month, the company said, and 65 percent of all subscribers use less than 200 MB per month. Ostensibly, tiered data pricing will be a good deal for almost everyone.

The problem is that data usage is on the rise. Billshrink, a company that helps people pick the best cell phone plans based on usage, told CNet that smartphone data consumption has increased 3.5 times in the last 18 months, and that the number of people who stay within AT&T’s new high tier of data consumption jumped from 7 percent in February 2009 to 30 percent in May 2010.

As carriers move to faster 4G wireless networks, the thirst for mobile data will grow. Consumers will either have to pay close attention to how much data they use, or carriers will make out like bandits. Not good, either way. Here’s hoping Sprint and T-Mobile hold out.

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