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.

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Comments on “Verizon Claims Nobody Wants Unlimited Data, Wouldn't Be Profitable Anyway”

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DannyB (profile) says:

They don't need what we don't offer

I remember reading about this in The Dragon Book decades ago.

Why didn’t an early FORTRAN compiler offer arrays with more than 3 dimensions? Because very few programs need arrays with 4 or more dimensions. But if your compiler doesn’t support 4-dimensional arrays (or more), then of course, you’re not going to see any programs in your language that use that feature.

Anonymous Coward says:

Low data caps can/are affecting innovation

The low data caps we have today is going to affect innovation if it isn’t already. I had an unlimited plan and though I didn’t use a lot of data, I never thought twice about it. Now that I am on a limited plan, it is always in the back of my mind when I have to use data for navigation or other tasks. I can tether my company laptop and VPN into the network and work remotely. But now I am unsure if that is going to cost me money.

If we want true innovation, we need to take the chains off and let the data flow and see what people come up with. Instead, we have 4 companies effectively throttling the entire user base.

That Anonymous Coward (profile) says:

I await the first lawyer who cooks up a nice class action lawsuit targeting advertisers. They are unwanted intrusions that are costing consumers money as the providers look for ways to extract even more money.

Pity the poor provider using DPI to stuff their own advertising into the pipe, if they don’t charge consumers for that advertising data useage there will be more lawsuits.

The amount of data consumers is using has been growing, but its growth is being artificially held back by providers who feel compelled to keep raising profits while offering as little as possible. Eventually one of the major networks will collapse because all of the deferred maintenance and expansion needed to support the demand will catch up with them. And we all know the money to fix it won’t come from the CEO’s paycheck they will come begging for us to save them from the results of their greed, and hope we’ll forget how they did it to themselves when it happens again.

SirWired (profile) says:

Seems like a reasonable answer to me

Using “Consumers don’t want unlimited plans” as shorthand for: “We can’t charge what we’d like (and meet our Return on Investment goals) for unlimited plans” seems to be a perfectly valid and normal answer for me. It’s a business decision VzW has chosen to make.

Because I love car analogies: I may want a fast car, but I am rather unlikely to buy a car from a company that gratuitously puts a 600HP V12 in every vehicle; I’ll shop elsewhere, because I expect their prices will be too high.

(But yeah: “‘Limitless’ means we’ll let you spend your data on whatever you like” is pretty stupid.)

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