Verizon Wireless lowers voice plan prices, expands data plan requirement

Friday, January 15, 2010

Verizon Wireless lowers voice plan prices

NEW YORK — Verizon Wireless is cutting the price of unlimited call plans, but the largest cell phone carrier in the U.S. is requiring more of its customers to buy the data plans used to access the Internet and check e-mail on high-end mobile devices.

The latest move in a long-running pricing competition between the nation’s wireless carriers shows that the industry is mature and competitive, which leads to lower prices for customers, said Walter Piecyk, an analyst with Pali Research.

But it also shows that data use is becoming an increasingly important service for mobile carriers as they look to new sources of revenue from customers dependent on mobile access to e-mail and the Web.

Verizon Wireless said Friday it will now charge $70 a month for an unlimited monthly calling plan. Such a plan previously cost $100.

A plan for unlimited calls and text messages will cost $90 starting Monday. It previously cost $120. The new plans won’t affect existing customers, Verizon said, unless they decide to move to the new plans.

But Verizon is also making more customers sign up for data plans, which are used by a growing number of people with powerful mobile gadgets where phone calls are just one among many features.

Customers who buy any 3G, or third-generation multimedia phones will now have to sign up for a $10 per month data package, which gives them 25 megabytes a month. Such multimedia phones are not the high-end smart phones like the Droid, Verizon said, but phones such as the LG enV series, offering HTML browsing, music and other features like keypads.

Jefferies analyst Jonathan Schildkraut estimates this means about 3 million to 3.5 million customers who will now be forced into spending at least $10 a month on data.

The high-end 3G smart phones like the Droid have a requirement of a $30 per month unlimited data plan. The company is also discontinuing a plan that cost $20 a month for 75 megabytes.

Piecyk said the changes show Verizon is trying to focus more on data, rather than cut prices for the sake of cutting.

“They are trying to get customers focused on valuing data by increasing how much data costs in comparison with voice,” he said.

Schildkraut noted that the company’s new “all-you-can-eat” voice plan is only $10 higher than a 900 minute per month deal. This highlights declining voice use by customers replacing phone calls with text messages and e-mail, the analyst said in a note to investors.

Verizon Wireless also introduced new prepaid calling plans, at a monthly rate $5 above what it charges for post-paid customers who sign a contract. It is asking $75 per month for prepaid unlimited calls. This is more than what low-cost wireless carriers such as MetroPCS Communications Inc. and Leap Wireless International Inc. are charging, a sign Verizon Wireless is not necessarily interested in getting in a price competition in this area.

Verizon Wireless is a joint venture between Verizon Communications and Britain’s Vodafone Group PLC.

Shares of Verizon Communications fell 67 cents, or 2.2 percent, to $30.55.

Shares of AT&T Inc., which had no comment on Verizon’s pricing changes, fell 41 cents to $25.78.

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