Verizon Considering Usage-Based Wireless Data Pricing

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News Posted: Sat, Jan 16 2010 8:00 PM
Verizon's Chief Technology Officer *** Lynch says wireless companies will eventually have to change how they bill customers. More specifically, Lynch is talking about charging customers based on the amount of bandwidth they use. According to the Wall Street Journal, Lynch recently said current flat fee data plans with unlimited Internet access encourage overuse of wireless networks by a small number of bandwidth hogs.

Although wireless carriers should be able to handle the increasing demand for Internet usage over the next few years by simply upgrading to the next generation of wireless technology, Lynch expects that carriers will need additional spectrum and new ways of billing in the long-term. "We will end up billing differently in the future," said Mr. Lynch. Lynch has been known for his view that carriers should charge on a metered basis similar to how water and power companies bill their customers.

Even if changes will be necessary someday, Lynch has said that the company has no immediate plans to change how it bills its customers. AT&T has also mentioned that it is exploring alternate ways to bill customers, though no official announcement has been made and the company has said that no changes are imminent.

Lynch and some others in the industry believe that metered billing could actually benefit most customers who use light to moderate amounts of data because they wouldn't be subsidizing the bandwidth hogs. However, while many have made this argument, no financial numbers have been given to back up the claim. AT&T has said that 3% of its customers are responsible for 40% of data usage, but we still don't know exactly how much data the top 3% uses or what an average business customer uses.

In the short-term, wireless companies plan to increase network capacity and download speeds by moving to 4G technologies. Verizon and AT&T both plan to use LTE or Long Term Evolution. Verizon has said that it expects to offer LTE throughout most of the U.S. by 2012 or earlier.

If you're reading this and cringing at the thought of a usage-based billing model, you're not alone. The thought of usage-based pricing makes many customers afraid that their already high wireless bills will increase even more. Hopefully carriers such as Verizon and AT&T will realize they need to provide numbers to show customers how good (or bad) such changes could be, keeping in mind that the "average" customer's usage is likely to increase over time, especially as cloud computing, new online apps, and tethering become more and more prevalent.
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3vi1 replied on Sun, Jan 17 2010 1:34 PM

Here's the problem I have with this: When telco's charge based on usage, they never *ever* charge at remotely reasonable rates.

Remember the kid that recently got the $22,000 cellphone bill because he didn't have an unlimited data plan. Do you think Verizon actually provided him with $22,000 worth of service in that month? Did they even provide him with 1/100th that? 1/1000th?

That's what I want - to be charge 100,000% markup on the actual cost of a service from a vendor that locks me into their plans and equipment.

It's no wonder Verizon didn't pursue the case, if more people realized what they're doing we'd have the government regulating their pricing down to below insanely-greedy levels. AT&T might remember that before they introduce their usage-based model.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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rapid1 replied on Sun, Jan 17 2010 1:54 PM

This stuff is the reason we chose not to go with the smart phone option so far. Of course this really has nothing to do with this exactly. However; the added 30-50 bucks per phone monthly is just pointless to me. We have computer availability anywhere we are except when we are going out. I can't justify it with that as the only need.

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It makes sense to me. Wireless bandwidth is finite, so it seems reasonable to charge people based on how much of the wireless bandwidth they use.

And wireless service is far from a monopoly. Between Verizon, AT&T, Sprint, T-Mobile, etc. I expect there will be the usual competition for business. None of them will be able to set unreasonably high rates.

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Great point 3vi1. And lets not forget the psychological component. Most parents would rather pay $20 and never have to worry about their kids' data usage. That extra few dollars not only buys you unlimited data but peace of mind.

If you try to isolate the bandwidth hogs on one end, you'll end up alienating the rest of your customers. And if the number is as paltry as 3%, it doesn't make any sense to do so.

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Agreed. The data plan is a bit overpriced, especially if you spring for the Iphone.

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rapid1 replied on Sun, Jan 17 2010 6:12 PM

Lets hope so jwilliams as it is now at 360 per phone as a minimum price for a data plan it is just to much considering with two it almost a grand plus your cost for wireless service you already pay.

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3vi1 replied on Sun, Jan 17 2010 6:48 PM

>> it seems reasonable to charge people based on how much of the wireless bandwidth they use.

And as a bonus, if I don't like someone I can just start forging 64k pings to them until they're bankrupt.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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If this is a concern for you, you might want to look for a plan that has a cap on monthly usage. Or a provider that scans for and filters out such abuse.

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Remember text spammers? Yeah, I had to change my phone number once because of that.

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360 what, dollars? Per month?

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3% of users, but 40% of usage. I don't think 40% is paltry. I wouldn't mind paying 40% less!

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Don't forget the initial $100-200 you'd have to pay for the Iphone.

@jwilliams He means $30/month x 12 months = $360.

Now if you have a corporate account, you can get as much as 25-30% off that, like my family did.

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realneil replied on Mon, Jan 18 2010 9:42 AM

If they want to offer an unlimited plan and then ding people for over-using that 'UNLIMITED' plan,...then they should allow those people a free contractual 'OUT' of the plan as well. But they will not. They like the fact that they can get away with locking people into a contract for two years at a time and being BARELY responsible for their own performance for that time. All the Cell companies get away with way too much to suit me.

Rely on big corporations to redefine the English language (unlimited means limited folks!) to suit their greed.

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Verizon will never let you out of a contract. I'm pretty sure they make most of their money because people get out of contracts. So it seems fitting that they would charge for the bandwidth you use. I wonder what the stance is of the other service providers.

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rapid1 replied on Wed, Jan 20 2010 3:06 PM

I took advantage of this offer on day one for my family share plan We will see how it goes. I did not go the umimited route though I got the combo voice text at 1400 mintutes with a data plan "Required on one phone ".

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