Verizon Claims Nobody Wants Unlimited Data, Wouldn't Be Profitable Anyway
from the not-the-droids-you're-looking-for dept
Back in 2011, Verizon and AT&T eliminated unlimited wireless data plans, instead pushing users toward share data allotments and overage fees as high as $15 per gigabyte. And while the companies did “grandfather” many of these unlimited users at the time, both companies have made at art form out of harassing or otherwise annoying these customers until they convert to costlier shared plans. And despite the fact that such overage-fee-based plans confuse the living hell out of most customers (who have no idea what a gigabyte is), both companies continue to insist that customers don’t actually want unlimited data.
Speaking at an investor conference last week, Verizon CFO Fram Shammo once again declared that Verizon knows what consumers want, and it isn’t unlimited data:
“At the end of the day, people don’t need unlimited plans,” Verizon Chief Financial Officer Fran Shammo said at an investor conference Thursday.”
And despite the fact that plenty of companies (like T-Mobile) have seen explosive growth of late selling unlimited data plans, Shammo proclaimed making money off of unlimited just isn’t possible:
“T-Mobile and Sprint have introduced cheaper unlimited data plans — in exchange for slowing the connection for lower-resolution video — and AT&T has been trumpeting its own unlimited data bundle with DirecTV video service. The push to unlimited data marks a reversal of the last few years of rhetoric about the costs of delivering service. For Verizon, that remains the biggest argument against unlimited. “You cannot make money on an unlimited video world,” he said
Of course what Shammo means is that Verizon won’t see the same generous profit margins it’s currently seeing if it were to actually give consumers what they want. Verizon saw $8.0 billion in profit on $21.7 billion in second-quarter revenues in large part thanks to shared data plans (though Verizon Wireless’ earnings were perfectly healthy under unlimited data plans as well). Since most users don’t know what a gigabyte even is, they tend to sign up for bigger plans than they actually need for fear of hitting the overage wall.
Those fears pay huge dividends for the mobile carrier, whose wireless plans are constructed like a giant funnel that constantly pushes users to more and more expensive levels of service once in the door.
Verizon for years has justified some of the highest rates in the industry as reflective of the overall quality of its wireless network. But as competitors like T-Mobile begin to catch up, Verizon’s running out of marketing ideas to justify its service’s higher price point. Enter last week, when Verizon responded to new unlimited data promotions from Sprint and T-Mobile with new ads proclaiming that the company doesn’t sell unlimited data, it sells “limitless data.” When asked how you can call a gigabyte-capped shared data plan limitless, Verizon PR trots out its very finest dancing shoes:
“Limitless refers to how you can use your data and unlimited refers to the amount of data,? said Kelly Crummey, director of corporate communications at Verizon…Our competitors claim they offer ?unlimited plans? but if you really look at them, they are full of limits on how you use your data with thinks (sic) like SD (not HD) and automatically slowing down your speeds. The way our plans are structured, you can use your data however you want ? there are no limits.
Well, no limits except the very clear limits. Apparently, Verizon thinks that you compete by telling customers what they want while abusing the hell out of the dictionary. It should be interesting to see how that tactic plays out as T-Mobile continues to erode Verizon’s wireless market share.