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Verizon paves the way for usage-based pricing for LTE

25 января 2010

The LTE operators will be looking to new pricing approaches for their new networks, trying to achieve a better balance between flat rate tariffs and the booming usage of their network capacity. Verizon’s CTO Dick Lynch told The Washington Post that LTE pricing would probably involve a basic flat fee plus usage-based charges for any bandwidth consumed on any LTE-enable device.

The resulting bill could be similar to that for cable service or utility, with a base rate plus premium add-on fees. Increasingly, carriers need to get users accustomed to paying extra for high usage of overstretched wireless capacity; as well as finding ways to support multiple devices within one contract and bill, including portable hotspots like the MiFi or Overdrive.

Whatever the details of LTE billing, the days of all-you-can-eat are ending, and both Verizon Wireless and AT&T are revising their tariff structures for 3G too, to get more value from mobile data. Verizon shook up its prepaid and postpaid price plans last week to get more revenue from exploding data usage. AT&T quickly followed suit. Verizon’s moves are designed to improve the situation where rising data levels, on flat rate contracts, deliver little added value to the carrier. The sop to consumers is that they will be simplified in structure and provide lower unlimited price points for more casual users.

“To me, the future here is about data, and this is about data in my view,” said Verizon CEO Lowell McAdam on an investor call. “It’s the smartphone portfolio teamed together with very simple data pricing.” He added that this was mainly geared to attracting high value customers, “as an on-ramp to LTE”.

Under the new monthly plans, the unlimited price point falls from $99 to $69.99 for unlimited calling or $89.99 for unlimited talk and text. Nationwide Family Share Plans will now have unlimited options for $199.99 for voice, or $149.99 per month for voice and text on just two lines.

Verizon has also sought to simplify its confusing device structure, splitting all but the most basic handsets into three categories - full smartphones, like the BlackBerry and Droid; ‘3G mediaphones’, typically with an HTML browser and the Brew software platform; and ’simple featurephones’. Each category comes with its own distinct data plan, designed to ensure that users of smartphones, which drive high volumes of data consumption, generate greater value for Verizon; while owners of midrange handsets are encouraged, with new entry points, to increase their data usage and possibly upgrade to higher end gadgets.

So, the $9.99 25Mb monthly data tariff is now extended to all 3G ‘mediaphones’, axing the $19.99 option. Customer on featurephones will continue to pay $1.99 per Mb or go for a $9.99 or $29.99 data contract. Consumer data packages for 3G smartphones, including BlackBerry, Windows Mobile and Android devices, will remain at $29.99 per month, but this will be the minimum rate required for using data on a smartphone.

Also in the service of streamlining, as well as lower costs, Verizon plans to reduce the number of devices offered by its stores from 80 to 50, and in future, this number will fall further.  This will intensify the competition among handset makers for slots at Verizon, but should generate better volumes and value for the successes. McAdam plans to add 20 new smartphones “down the road”, offering Droid-type capabilities. These will run a mixture of BlackBerry, Android and, reportedly, iPhone and LiMO systems.

Verizon has always been wary of flat rate prepaid plans, but it has changed its mind, offering the new Prepaid Monthly Unlimited Talk plan, at $74.99 a month, compared to $69.99 for the same plan on contract. There is also a prepaid talk/text option for $94.99. Previously, the cheapest unlimited plan was $99.99. McAdam said this still showed Verizon charging a premium for its network quality and brand, but it would be able to compete with unlimited carriers too.

Over at AT&T Mobility, the response to Verizon’s changes was swift. Within nine hours, the number two cellco had brought its rates into line with its arch-rival’s, as it accelerates the upgrade of its 3G network to HSPA. AT&T has slashed $30 off its monthly single-line, unlimited calling plans for featurephones, now $70 a month. Two-line family plans will include unlimited calling at $120 per month, down from $200, plus an additional $20 per month for texting on single lines, $30 for family plans.

For its ‘quick messaging devices’ - the AT&T equivalent of Verizon’s midrange ‘mediaphones’ - customers will have to sign up for an unlimited messaging plan as well as just voice, so tariffs for these products will start at $90 per month for a single line. The QMDs are to have an enhanced position in AT&T’s portfolio this year, and the firm has introduced new operating systems such as Brew to the range.

Smartphone users will be able to purchase unlimited voice and data for $100 per month, plus an unlimited messaging option for another $20. The new plans will be available to both new and existing customers, though the latter will not be required to extend their current contracts.

Источник: 4G Trends

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