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Verizon Communications Inc
Pandora Media Inc
Verizon Wireless, the largest U.S. mobile-phone carrier, will overhaul its data pricing this month when it debuts a shared-usage plan for multiple devices starting at $90 a month for one smartphone and 1 gigabyte of data.
The new Share Everything Plan includes unlimited calling and messaging bundled with a specific data allowance for as many as 10 Verizon Wireless phone lines. The offer will be available June 28 and apply to all new customers, according to a statement.
Verizon Wireless and AT&T Inc. (T) have been readying a shared- data approach to billing to stop erosion of voice and text revenue and emphasize one big bucket of Internet data to split among multiple users. The move away from separate plans for each device is intended to encourage customers to use more data and buy larger monthly allotments.
“Today’s move by Verizon, while well telegraphed, is the most profound change to pricing the telecom industry has seen in 20 years,” Craig Moffett, a Sanford C. Bernstein & Co. analyst in New York, wrote in a research note.
With the new plans, Verizon will eliminate the current offers like the family plan for new users. The company stopped offering an unlimited data plan last year. Existing customers can keep their current plans, said Brenda Raney, a spokeswoman for the Basking Ridge, New Jersey-based company.
For a comparable package under Verizon’s old plan, a user could combine a monthly $30 2-gigabyte data allotment, a $40 calling plan and a $20 unlimited text messaging charge for a total of $90. Families could add additional members for $10 a month. Each new family member had to buy a separate data allotment.
Under the new offer, Verizon Wireless, co-owned by Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD), will charge $40 a month for smartphones, $30 a month for basic phones and $10 a month for tablets. On top of that there are six data-service plans starting at 1 gigabyte for $50, 2 gigabytes for $60, 4 gigabytes for $70 and as many as 10 gigabytes for $100.
“It is an effort to move ARPU up,” said Walt Piecyk, an analyst with BTIG LLC in New York, referring to average revenue per user, a measure of how much each customer spends each month.
As smartphones gain popularity, consumers have become less interested in paying for calling plans and are finding free alternatives to text messaging, Piecyk said. By making voice and texts unlimited, Verizon eliminates the cheaper plans and turns the price emphasis toward tiered data allotments for multiple devices. The new offers also include hot-spot service that can share the data connection with other devices over Wi-Fi.
By charging a monthly fee per device and eliminating the cheapest prices such as a $10-a-month entry level for family members and $10 text messaging, Verizon Wireless’s new plan is not a bargain for budget shoppers, Piecyk said. The trade-off is that big consumers of services like videos on Google Inc. (GOOG)’s YouTube and Pandora Media Inc. (P) streaming radio can soon share big buckets of Internet data.
With the new shared data plans, Verizon can “provide savings at higher ARPUs, which is where Verizon wants to move their customers,” Piecyk said.
AT&T plans to roll out an equivalent offer in 2012.
“We’ll have something later this year,” said Ralph de la Vega, president of the Dallas-based company’s mobility division, in an interview last month.
Verizon Communications gained 0.9 percent to $42.94 at the close in New York. AT&T rose 1.1 percent to $34.98.
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