Ask Maggie: Will Verizon kill its unlimited smartphone data plan?

This week Ask Maggie looks at whether Verizon is likely to follow in the footsteps of rival AT&T by getting rid of its unlimited data plan, in addition to a couple other burning questions.

What good is a smartphone without decent data service? Indeed, accessing the Internet and all those Web-based apps is the only reason most people even want a smartphone.

Ask Maggie

But what if your service provider starts capping your data service and charging you for how many megabytes of data you use every month? For some consumers, the thought is absolute heresy. In this week's Ask Maggie column, I try to quell one reader's concern that Verizon Wireless will abandon its unlimited data plan once the iPhone arrives.

I also advise another reader to consider an Android device other than the Motorola Cliq. And I provide some suggestions for a cheap prepaid smartphone data plan.

Ask Maggie is a weekly advice column that answers readers' wireless and broadband questions. If you've got a question, please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header.

Will Verizon abandon unlimited data?

Dear Maggie,

I was a Verizon Wireless customer who switched to AT&T when the iPhone came out the first time. I love my iPhone, but hate the AT&T network. I'm looking forward to switching back to Verizon once it's available on that network. I've read reports that Verizon is planning to adopt a tiered pricing plan like AT&T's. I love my unlimited data plan and I'm not willing to give it up. So my question to you is what do you think is going to happen? Will Verizon do what AT&T has done and put a cap on the data plan? If so, I'm not sure what I should do.

Thanks,
Sam

Dear Sam,

First of all I must disclose that I don't have a crystal ball. I can't see the future, which means I can't say for sure what Verizon Wireless will do. Lucky for you, Verizon has neither announced the iPhone, nor has it talked details of its pricing plan yet, so you have some time to think through your options.

But just to ease your worry, my prediction is that Verizon will not eliminate its unlimited data plan as AT&T has done. Here are a few reasons why I believe this. And I'll go through each one for you.

For one, consumers don't like usage-based billing. A recent survey by the Wall Street equity research firm Sanford Bernstein found that 40 percent of smartphone users are unhappy about the idea of usage-based billing. Furthermore, the survey found that people are actually willing to pay more for unlimited plans, even if they do not necessarily need them. For instance, the average monthly data usage among all smartphone users is about 300MB . AT&T's top tier of service is capped at 2GB.

What this means is that most smartphone customers don't even come close to exceeding their monthly limit , and yet they are more comfortable paying a higher flat rate for the peace of mind that they will not exceed the cap and be charged overage fees.

Another reason I don't think Verizon will mimic AT&T's data plan is because executives have pretty much said that they won't. Based on public statements about pricing, Verizon executives seem to get that consumers don't want to give up all-you-can-eat data plans. Still, Verizon knows it must do something to curb data consumption on its network or risk falling into the same problems that AT&T has had. This is why the company is experimenting with a low-end data service that offers 150MB of data per month for $15.

Both Verizon CEO Ivan Seidenberg and COO Lowell McAdam have publicly said that usage-based pricing is coming to Verizon when it launches its 4G wireless network. In an interview with The Wall Street Journal this week, Verizon execs said that consumers who want faster service on 4G will have to pay for it. But Seidenberg also was careful to say that this does not mean the death of the unlimited data plan.

The problem that wireless carriers face right now is that demand is outpacing upgrades to network infrastructure. In other words, they can't get their networks upgraded quickly enough or get enough spectrum freed up to keep up with the exponential growth in usage over time.

But more importantly, they can't afford these upgrades. Flat-rate unlimited pricing reduces how much revenue carriers make on each bit of data traversing their networks. In other words, the more data you use on an unlimited data plan, the less money AT&T and Verizon are making from that service on a per-bit basis. So they need to be able to find a balance in which they can charge customers who use more of the network's resources more money for access to those resources.

Of course, this is very unpopular with consumers, who have gotten used to all-you-can-eat Internet data buffets. But lucky for Verizon, American consumers are happy to pay a premium for all-you-can-eat. The recent Sanford Bernstein survey I mentioned suggests consumers are willing to overpay for unlimited plans, even when they don't need them. And if they can't get an unlimited plan, they're willing to switch carriers and phones to get one (with the exception of the iPhone).

This is likely why AT&T grandfathered existing iPhone and other smartphone customers into the unlimited plans. But because AT&T was so desperate to alleviate congestion on its network, it was unable to continue offering a marked-up unlimited plan to consumers going forward.

Verizon is in a different situation. Its network isn't yet feeling the crunch that AT&T's network has been feeling. This may change after the iPhone is introduced if millions of iPhone users, such as yourself, decide to switch to Verizon. However, Verizon has been feeling out how these demands will affect its network with the Android phones it now offers. And so far the network has held up.

So my prediction is that Verizon will offer a few tiers of service that may appeal to cost-conscious customers. But I think it will also continue to offer an unlimited plan. The only caveat is that Verizon may not offer the unlimited plan at $30 a month. My guess is that it will keep unlimited data for those who really want it, but it will price the service high to encourage people to select a service with a limit. If my prediction comes true, then we'll have to see how much people are truly willing to pay for the peace of mind that comes with unlimited plans.

Android advice

Dear Maggie,

I am considering the purchase of a Motorola Cliq XT phone that uses the Wal-Mart family network on T-Mobile. The Android operating system is version 1.5. Are operating system upgrades offered through T-Mobile or are they only available through a proprietary Wal-Mart network? Is it easier to kill unwanted apps with this older version of the operating system?

Thanks for your help,

Don

Dear Don,

The upgrade will come from the wireless operator, which in this case is T-Mobile USA. Wal-Mart is simply the reseller. T-Mobile and Motorola recently announced they'd soon make available Android 2.1 Eclair for the year-old Cliq phones. The company has already posted a support page to help guide customers through the upgrade process.

Scott Webster, who blogs about Android for CNET, noted in a blog post last month that the new upgrade to the Cliq is coming late, and it enables features that many other Android users have taken for granted.

"For example, they're just now getting speech-to-text, turn-by-turn navigation, voice search, resizable widgets, seven home screens, and a connected music player. Meanwhile, most of the Android community has enjoyed these features for nearly a full year," he said in his blog posted last month.

Webster also mentioned that 2.1 Android OS will likely be the last upgrade for the Cliq. So if you're considering an Android phone, you may want to look at a different Android phone given that this one is already outdated and has little hope of ever becoming as robust as some newer Android devices.

As for disabling certain apps on your phone , this should not be a problem with either the older 1.5 version of Android OS on the device or the newer 2.1 version of software for the Cliq. You should be able to disable certain apps easily with a task killer that is found in the Android Market, such as Advanced Task Killer. These apps allow you to easily turn off a bunch of apps at once and leave the ones you liked running.

Prepaid smartphones

Dear Maggie,

I read your column dated May 19th with its review of prepaid plans .

I have been a T-Mobile prepaid per-minute plan user for several years. Needless to say, I am a low minute user. I carry a Palm PDA as a second device for data, calendaring and e-mail using Wi-Fi to sync to Outlook.

But now I'd like to consolidate my devices, and I'd really like a smartphone. The problem is that I want a prepaid plan with few voice minutes and lots of data and access to Wi-Fi. This would be the perfect device and/or plan for me and I think many other people.

Do you have a suggestion for us low-volume talkers, who do not need cell phone network add-ons?

Thanks,

Mike

Dear Mike,

Your best bet is to get Virgin Mobile's $35 BlackBerry Curve prepaid plan. With this plan you get unlimited data and messaging with only 300 voice minutes. Boost, Cricket, and MetroPCS also offer reasonable prepaid options, as I explained in the story you referenced.

These companies offer other types of smartphones with unlimited voice and data for $60 a month. Even though you don't need all those voice minutes, you can't beat the price. You could also stick with T-Mobile USA, which offers a $60-a-month plan with 500 voice minutes and unlimited data. If you aren't using many voice minutes, then the 500 cap shouldn't be a problem.

Verizon Wireless also just recently started offering prepaid wireless data for smarpthones . But it's expensive. The 3G prepaid data package is $30 a month for unlimited data usage. But the 450-minute voice plan, which also comes with an unlimited texting package, that must be purchased with it costs $65 a month. This makes your total monthly service cost about $95 a month.

 

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