iPhone service pricing: Verizon vs. AT&T (FAQ)

The long-awaited launch of the Verizon Wireless iPhone is almost here, so how much will Verizon charge new iPhone users on its network?

When Verizon Wireless first announced a couple of weeks ago it would begin selling the CDMA version of the iPhone, the company didn't disclose pricing of the service plans. And for the past two weeks, the company has been rather cagey about talking specifics of the pricing plan.

Even though Verizon has danced around the idea of offering usage-based billing with various pricing tiers for months, the company has now revealed that it will charge iPhone subscribers the same price it's been charging other smartphone customers.

The news has left many would-be Verizon iPhone customers pondering what they should do. The Verizon iPhone that goes on sale February 10 is the same model that Apple launched in June 2010 on AT&T. Most of the features are the same. The networks are different, which will be the deciding factor for many customers. But for bargain-hunters looking for the best deal in terms of service for the iPhone, Verizon isn't giving them much to get excited about.

So far, it doesn't appear that Verizon is taking any aggressive steps in pricing to win customers from AT&T, which has been the only carrier in the U.S. to offer the iPhone since it was launched in 2007. But the carrier is hoping to entice some consumers by continuing to offer its unlimited data plan for $29.99 a month, at least for now.

To help iPhone fans get a better handle on service pricing from Verizon and AT&T for the iPhone, CNET has put together this FAQ.

How much will it cost me per month to own the Verizon iPhone?
Your individual monthly bill will depend on what features you add. But for now Verizon plans to charge iPhone users the same fees it's charging its other smartphone customers. So this means you will have the choice between different voice plans that range in price from $39.99 for 450 minutes of voice time to $69.99 for unlimited voice. Verizon also offers texting plans, including a $20 unlimited texting plan.

The data plan, which is required when you subscribe to any Verizon smartphone, costs $29.99 per month. And it is unlimited. Verizon caps data usage on its wireless data cards that are used to connect laptops to the Internet. And it also applies a data cap on devices that connect to its network via a MiFi device. But for pure smartphone Internet data usage, such as subscribers using the iPhone, the service is considered unlimited. So there are no hidden overage charges from Verizon when using an unlimited data service on your smarpthone in the U.S.

Didn't Verizon offer a cheaper data plan for smarpthones that only cost $15? What happened to that?
Verizon has eliminated the $15 a month plan that offered 150MB of data per month. The company said that this service, which it introduced in October last year, was a promotion. That said, the company has indicated that it will offer tiered services in the future. So perhaps it will change the amount of data or the price tag in a future offering.

How does AT&T's iPhone service compare in price to what Verizon will offer with the iPhone?
In terms of voice services, AT&T and Verizon offer almost the exact same plans that range in price from $39.99 to $69.99 a month for 450 minutes to unlimited, respectively. AT&T also offers texting options, which include a $20 a month unlimited texting plan.

Where the price differs between the two service providers is in data. AT&T no longer offers an unlimited data plan for new smartphone customers, including new iPhone customers. Instead, new customers can choose between a $25 a month plan that offers 2GB of data and a $15 a month plan that offers 200MB of data.

What about tethering? How much does it cost from either AT&T or Verizon?
Each carrier offers tethering. And they each charge $20 extra a month to use the iPhone or any smartphone as a modem to connect at least one other device to the Internet. But beyond the basic prices, the plans work very differently and that can factor into the overall cost of the service.

That sounds complicated. Can you explain how Verizon prices the tethering plan for the iPhone?
It is sort of complicated. So the way it works for Verizon is that a customer who wants to tether can pay $20 on top of the $30 data fee for the ability to use their iPhone as a modem. The added benefit of Verizon's tethering plan is that turns the iPhone into a Wi-Fi router, and you can connect up to 5 devices to the Internet via the iPhone. The $20 additional fee will give you 2GB of data that is separate from the unlimited data that you can use when using your iPhone as an iPhone. But if you go over the 2GB cap, Verizon charges an additional $20 for every 1GB that you use over the cap.

How is this priced differently from the tethering feature that AT&T offers on the iPhone? Can the AT&T iPhone be used as a hot spot, too?
AT&T offers the ability to turn the iPhone and other smartphones into a modem to connect one other device to the Internet. But it does not turn it into a Wi-Fi hot spot, like the Verizon iPhone does.

Like Verizon, subscribers to the service must pay an extra $20 a month on top of the $25 2GB a month data fee.

But one key difference is that 2GB of data usage is for both regular iPhone data usage and also any data usage incurred by a device connected through the iPhone. This means it's very easy to eat through the allotted data on this plan. But the overage charge is cheaper than Verizon's. It's only $10 extra for an additional 1GB of data if you exceed the 2GB limit.

I've heard that Verizon is only offering the unlimited data plan for the iPhone on a limited basis now. When will they stop offering limited data plans?
You are correct. Verizon representatives have said that the unlimited iPhone data deal will only be offered for a limited time. After that the company plans to offer some kind of tiered service that provides buckets of Gigabytes per month. That's all they are saying at the moment. They haven't said how long the promotion will last or what the new plan will look like in the future. But if you get an unlimited data plan while it's offered, you will have that unlimited plan until your contract expires.

What happens after my contract expires on Verizon? Will I be able to get a new phone and keep my unlimited data plan?
The terms and pricing of your Verizon data plan only apply for as long as you are within your contract period. After your two-year contract expires, you can keep your phone and keep the unlimited data plan. But if you want to upgrade to a new phone, you'll have to sign a new contract and be subject to whatever the new pricing is at that time.

I've heard that if you already have an unlimited data plan on AT&T's network that you get to keep that for life? Is that true?
AT&T has "grandfathered" all its smartphone subscribers who were using its service before June 2010. This means that existing customers on contract can keep the unlimited data plan. And if they don't change their plans, they can keep the unlimited plan as long as they like, even if they upgrade to a new phone. For customers who bought their phones after June 7, 2010, they must choose one of the two plans currently offered.

How important is it to have unlimited data service? Should this even be a factor in my decision between getting the iPhone on Verizon or AT&T?
It depends on how much data you think you will use. But for the average person, the 2GB plan from AT&T offers plenty of data usage each month. And for some very low-data usage customers, AT&T's $15 a month plan with 200MB of data is sufficient. And it offers them a way to save some money. But most people will need the 2GB plan, which at $25 a month is only $5 cheaper than Verizon's current unlimited data plan.

AT&T and Verizon offer tools on their Web sites to help you estimate your data usage.

Who would benefit most from an unlimited data plan?
If you plan to stream a lot of media or use applications that you must constantly refresh then you might benefit from an unlimited data plan. For example, listening to Pandora for three to five hours at a time could be a problem. Watching one or two movies a day could also get your monthly usage close to the 2GB mark. Using Google Maps several hours a day every day could also almost reach that limit. Using Skype as the primary way to call people will also get consumers close to their data limit.

But if you are using these applications in moderation, or if you use them mostly in Wi-Fi hot spots, which does not count toward your data usage totals, then you probably would be fine with AT&T's 2GB service. You can also cut down on your data usage by not installing or upgrading apps over the air. You can upgrade them without consuming wireless data by syncing your phone to your computer.

One thing to keep in mind is that data usage will likely increase as more data-hungry applications are introduced. So for many people, the unlimited data plans are really an insurance policy to guard against potentially heart-stopping data overages at the end of the month.

Correction 3:25 p.m. PT: An earlier version of this story misstated the number of minutes available on Verizon Wireless's $39.99 voice plan.