Verizon Offers High-Use Data Plans, Inadvertently Points Out Enormous Rip-Off

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News Posted: Wed, Aug 8 2012 5:43 PM
Verizon Share EverythingSix weeks ago, Verizon launched its new "Share Everything" data plans, declaring that everyone would henceforth use these plans or be banned from upgrading their phones at a discount, and unveiled a suite of options that range from $50 for 1GB to $100 for 10GB (not counting per-device fees). Unlimited talk and text is now baked into the per-device base fee, which means that users with minimal data needs could actually benefit from a swap.

Now, the company has admitted that its usage plans stretch higher, though these plans are usually offered on customer support lines or in the event of overages. Verizon will sell you 12GB of data for $110, 14GB for $120, 16GB for $130, 18GB for $140, and 20GB of data per month for $150. If that sounds like a staggering amount of data, keep in mind that the plan is for a shared group of devices -- you can chew up considerably more data if you use devices in parallel or have multiple family members all viewing HD content.

Verizon's publicized Share Everything plans

Which is, of course, the point. On Verizon's highest baseline plan, they charge $10 per GB and call it a bargain. The 20GB plan cuts this to $7.50. The company still trots out the "most customers don't use more than 2GB" statement," but it really ought to retire that one. On unlimited data plans with "soft" caps or a 2GB limit, it was a way of reassuring people that they wouldn't go over. Now, it highlights the fact that Verizon charges $30-$50 per GB for the 1-2GB plans that apparently address almost everyone's needs.

Cellular towers and capacity rollouts are expensive, no one denies that -- but the pricing on these plans has to make Comcast, AT&T's U-Verse division, and Verizon FiOS weep with envy at the per GB profit margin. Ask yourself -- if you can buy a router that throws wireless across your entire home for $60, why is it that connecting to a cellular network should cost you nearly $60 a gigabyte, regardless of whether you live in downtown San Francisco or Billings, Montana?

The towers?

How about one of these instead?

That's a femtocell. Verizon calls their version a Wireless Network Extender. It's a miniaturized cell tower that connects to your existing broadband service and uses that connection to backhaul your voice or data traffic to Verizon, AT&T, or whoever your provider is. One of the benefits listed by both Verizon and AT&T is that you don't need an extra data plan for it. The minutes you use will come off your normal plan, just like always.

Pause and think about that for a minute. You have just paid Verizon $250 for a small cell tower. It connects to the Internet via a router and ADSL/cable modem, both of which you also paid for. It uses your bandwidth -- and if you have service with Comcast, that's a finite good or service. You've paid for every single product that carries the signal from your phone to the point where it vanishes into the wall, but you end up billed double for data.

There's nothing inherently wrong with femtocells. They're extremely useful, particularly in areas where cellular coverage is spotty. The problem is with the ridiculous notion that cellular traffic deserves to be priced at a rate 100-1000x higher than what you pay Comcast (with a one-time payment of $60-$100 thrown in for the router). The idea that paying exorbitant rates somehow subsidizes future growth has been proven false. AT&T made a huge point of telling the DOJ how it had no plans to build out 4G past ~80% of the country if it wasn't allowed to buy T-Mobile. Verizon stopped building out FiOS two years ago. Furthermore, none of the data plans being sold today come with promised updates or price freezes when the successor to 4G eventually materializes. $100-$200 a month doesn't even buy you a guarantee of service -- all we get is a "best effort" promise.

Cost per GB for iPad data, circa 2010.

There's a reason why the prepaid industry shed subscribers for the first time ever last quarter, and a lot of it has to do with ridiculously high data prices that don't actually reflect the real cost of access. Prepaid cell plans are gaining traction in the US, and if you compare US mobile per GB pricing to prices in other nations where prepaid phones are popular, the cost/GB is much lower.

Speaking of traveling, look at what world travelers pay per MB, based on country of origin. This data set is from 2011 and was compiled by OECD, the US is the red line.

What do femtocells and Verizon shared data plans have in common? They're all examples of how the cost of data has been distorted and turned into a ridiculous cash pipe. It's not surprising -- witness 10-20 cent charges per text message when texts are carried over an unused part of the phone line and literally cost the carriers nothing -- but it's something customers need to be aware of.

Back when cell phone were $30-$50, replacing a land line made sense. With data costs skyrocketing, a landline, good WiFi, and an emergency phone is beginning to look like a much better deal.
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The incredible skyrocket in price for cell phones and data plans reminds me of a lecture given in my econ 101 class, it was a lecture on drug addiction and distribution.

The professor showed that the amount of people doing drugs in ratio to the amount dealing determined the price. As the smaller competitors in the phone industry are eliminated the bigger players can up their bills with no backlash.

The professor showed that the way to drop drug consumption was to drop customers not dealers, because for every dealer pulled off the streets the price of drugs just went up a little and the rate of violent crime from users increased to pay the increased price to feed their addiction.

Today in America their are only 3 or 4 viable cell phone companies and the price has naturally skyrocketed, but the user base is firmly addicted and at the whim of the Cellular phone companies.

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rapid1 replied on Thu, Aug 9 2012 2:40 PM

Yeah I knew this was coming and saw one of the commercials. The only thing I really remember is seeing $350.00 in the small print blip. I remember when I tried out Sprint a couple years back in October and they wanted to charge me for a Femtocell when I got no service in my residence. I turned back on my old phone for a couple of months and then went to T-Mobile after MWC when all the new smart phones started dropping. The coolest part to me is I am grandfathered in on there 200MB data plan. Mind you I do not surf on my smart phone as I really have no need for it. I use the GPS, square card reader, Gas Buddy a lot they do not really use much data wise though. I have several tools I use as well and check email when I need to. Either way my point is first I was a Verizon subscriber for years, and second I left them because there in general a rip off.

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I think you hit the answer to the problem in the last paragraph. People are ditching POT (Plain Old Telephone) lines like crazy and the phone companies are trying to reinvent new ways to charge customers more for things they don’t need or use. The copper POTs cost the carriers nothing; the network is already built (many years ago), very little maintenance is needed, and they can charge you by the minute at different rates for what you use. I work in a small IT department and we manage a few cell phones. My boss and I were having this same conversation today because we had to add a new user to the company plan. If you want to purchase a ‘smartphone’ you are REQUIRED to purchase a data plan. If all of these devices already have WiFi, why is it inherent that we NEED a data package? We just want to give the person a phone because she’s mobile and give her the ability to check her email over the local networks at different sites. I’d be willing to bet that more than 95% of the population doesn’t even need this service. I’ve had a smartphone for more than 4 years now and I can only think of 2 times that this was truly useful; once being broken down on the road miles from town and needing a phone number for a local tow service. And in this case I would gladly pay a one-time-fee for the service as needed. WiFi is so widespread at this point it’s not hard to pick up an open signal walking down nearly any street. I think if people weren’t locked into these plans, they would realize how much they DON’T need data plans.

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tony4re replied on Thu, Aug 9 2012 4:43 PM

I'm happy to still have my grandfathered unlimited data plan. I was scared to see what the cost would actually be based on my family plan actual data usage. Now I know. Yikes! We use around 16 GB between the 3 smartphones in our plan. Under the new structure, I'd pay at least $40 more a month for what I'm using now. Considering my wife and I started with 3G handsets and the two of use used barely 2GB a month for two years, I feel as long as VZW keeps honoring my unlimited data status, I'm happy. If they take that away, they just removed my last incentive to stay with them. I know they have the best coverage but I don't travel all over the USA. The other three major carriers cover the DFW area quite well and now that VZW is requiring me to pay full price for handsets to keep unlimited data, They are walking a fine line to lose the thousands of dollars I pay them each year. I do use a lot of data because of the capabilities of my newer 4G handset. Making me pay forty dollars more to keep what I have would be... undesirable. That's the nicest way I can put it. Especially undesirable because I know that our next smartphones will either cost us full retail or will have to be used phones (likely with no warranty). I just don't like the idea of paying more and getting less...

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So the question then is, how long do we as the consumer allow them to continue to get away with this? I heard a very good saying, "The rich get richer as the poor get more poor." I'm thinking along the lines of the US economy. If the carrier charged less this means more money in our pockets, which means more money for us to spread and this in turn means more companies make money, and then they get to pay their employees more, and their employees then spend their money at different companies, and so forth. Economy is basically currency exchange, the higher the rate of currency exchange the better the economy. So, again, how long do we let the corporations continue to do this? If we as people know that they are screwing us over, why let them? Why not have everyone boycott them until they lower their prices, or, if we as the people create our own network and charge just enough to keep the network running? I don't see why this isn't possible. Just get a few investors, start small, then allow your customers to choose where they need coverage then let everyone know, "Hey, you need coverage there, then we will need 'X' amount of income to cover the cost." Raise the prices slightly, build the towers, then lower the price again to keep the network running.

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Joel H replied on Thu, Aug 9 2012 6:29 PM


You can keep your data plan -- but say good-bye to subsidized upgrades. From this point forward, if you want to use VZW, your phone is full price.

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Honestly not a huge talker use medium amount of text and little internet but this is why I bought a prepaid phone cost me about 7 dollars a month.

Not 70 not 100 not 150 and honestly phone cost 15 dollars then add a 20 dollar prepaid card every three months that comes with 90 days of service.

People give me crap but its so simple if phone dies buy new swap sim easy as that 15 is all it cost. Need to change phone number transfer contacts to new phone throw old away done.

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InsideSin replied on Thu, Aug 9 2012 11:48 PM

I envy the Europeans on what they have to pay for internet and cell phones plans. For me, these high prices are the only downfall to living in Canada.

"You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new."

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RTietjens replied on Sat, Aug 11 2012 3:04 PM

If you go to Consumer Cellular you are NOT required to have a data plan with a smartphone. CC only offers a couple of smartphones, but since they are a virtual carrier on the AT&T airwaves, it should be possible to transfer the SIM card from any CC smartphone to an AT&T-compatible unlocked phone. I haven't tried because my Moto Bravo is sufficient for my smartphone needs; all my heavy lifting is on the (non-cellular) Lenovo tablet.

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a completely greedy, repulsive company.

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Both AT&T and Verizon are an American multinational telecommunications corporation and the largest provider of mobile telephone. They both introduced “shared data programs” where the consumers purchase a monthly allotment of data that can be used among their various devices. Source of article: shouldn't you discover more here?

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