New Verizon Wireless Pricing Shows Growth Strategy

Verizon Wireless today announced that it is introducing new data, prepaid, and voice plans on January 18, 2010. The single biggest change is a new mandatory data plan requirement for all 3G multimedia devices. For "feature" phones, that will mean a $10 a month charge for use of up to 15 Mbytes. 

Smartphone packages remain at $30 a month. 

But Verizon also introduced new unlimited postpaid plans for voice ($70 a month) and unlimited talk and text for $90 a month. Prepaid unlimited plans sell for $75 a month for voice, and $95 a month for unlimited voice and texting.

"Nationwide Unlimited Talk Family SharePlans" will be $120 a month while "Nationwide Unlimited Talk & Text Family SharePlans" will cost $150 a month.

All Family SharePlan pricing includes the first two lines of service. The new plans do not apply to existing customers, though any current customer can change to any of the new plans without a penalty or contract extension.

So heree's the strategy background. Verizon wants to build the biggest-possible data customer base before it launches its new fourth-generation Long Term Evolution network. That's an essential part of getting a financial return on the 4G investment, and also reflects the growing importance of smartphones as a percentage of total devices sold and the importance of data service revenues.

Verizon also wants to protect its base of "high-value" customers by simplifying pricing plans, providing more value and encouraging uptake of higher-end plans. Verizon expects to see higher data penetration, higher average revenue per user and less churn, with lower-end customers moving up to unlimited plans in greater numbers. 

Verizon believes the moves to unlimited plans also will reduce operatinal costs. Since a large percentage of customer service costs are driven by consumers concerned about their usage and overages, unlimited plans will blunt the volume and cost of handling such requests. 

Strategically, the data plan moves also are a reflection of the vanishing voice revenues business, and the absolute centrality of data revenues as the mainstay of Verizon Wireless revenue.