The chief financial officer for Verizon Wireless told analysts of Wall Street on Wednesday that the company will be changing its unlimited data plans when they attempt to upgrade their plans. The unlimited plans will be changed over to tiered plans. CFO Fran Shammo said that his company will debut a ‘data share’ model by the middle of the summer. This will permit customers to purchase data that can be used across more than one device on a plan under the same account. The announcement was made the JP Morgan Technology, Media and Telecom conference held in Boston.
Once the new plan is offered, Verizon will not permit its customers to purchase unlimited plans when they upgrade to new smartphones. Verizon has not permitted new customers to purchase unlimited plans last year.
“As you come through an upgrade cycle and you upgrade in the future, you will have to go onto the data share plan,” Shammo said, “[We're] moving away from, if you will, the unlimited world and moving everybody into a tiered structure data share-type plan.”
The only company in the country that allows new customers to purchase an unlimited date plan is that of Sprint. AT&T lets its customers who have legacy unlimited plans to keep their unlimited plans when they upgrade their smartphones. Shammo said that the idea is to increase the revenue of the company as average revenue per smartphone user has dropped $10 the past two years.
The company believes that it will have to move to higher and more expensive data tiers because customers will be increasing their data usage on their smartphones.
“With the construct that we have dealt with around data share and where we see consumption of LTE going, when you put the combination of them together, we are fairly confident that we will see people start to uptake in the tiers, which is really where we will get the revenue accretion in the future.”
Basically, Shammo says that customers will be using more data, so in turn they will be paying more for what they use. Shammo also said that the company has successfully made money from charging customers a $30 upgrade fee that recently took effect. So, the change in the way the company handles its data packages will not be the only method the company is using to increase its revenue.
“We are really not seeing any impact from a customer base from that fee, so that was the right thing to do,” he said.