The End of the Age of Unlimited Bandwidth: Verizon adopts Tiered Pricing

by Matt Klassen on May 23, 2011

If you’ve seen the billboards or watched the commercials, you’ve no doubt been thinking that Verizon’s 4G network will solve the data crunch, ushering in a return to the golden age of unlimited do-what-you-please data plans, but it’s simply not to be.

As data demands for modern smartphones increase one of the clear casualties is the popular unlimited data plan. In fact, after several months of luring disgruntled AT&T customers to its $30/month unlimited plan, Verizon has announced that it will now be following AT&T’s lead and scrapping its unlimited service in favour of tiered plans.

While the move will likely be a blow to heavy data users, it really shouldn’t come as a shock, as Verizon made it clear during the rollout of its unlimited service that it would only be offering it for a limited time, a short window that will close this summer.

In fact, with current data consumption trends, carriers are already struggling to keep up with the demand, saying nothing about what will happen when 4G phones become widely available, meaning that soon unlimited plans will be completely extinct, no longer a cost-effective marketing ploy to lure in smartphone customers.

With the era of unlimited bandwidth quickly coming to a close, come summer time it looks like Sprint will be the last major American wireless carrier to offer an unlimited data plan, although I’m sure it is feeling the same price pinch that led AT&T last summer and Verizon this summer to introduce easier to manage tiered service.

Although one might expect the same consumer outcry that accompanied AT&T’s pricing shift last summer, Verizon has hinted that it plans to offer value bundles and family plans, making it easier for people to afford multiple phones on limited data consumption plans.

For its part, Verizon has remained silent regarding the particular of its proposed tiered service, but prevailing market wisdom suggests that it will closely mirror AT&T’s 2 GB for $25 a month or 250 MB for $15 per month. While data allotment numbers like this seek strikingly low compared to an unlimited plan, what carriers and customers are realizing is that aside from a few data hogs, most consumers don’t use their tiered allotments anyways.

But wasn’t the advent of 4G supposed to solve data issues, not create more of them? The unfortunately reality for carriers—and for consumers—is that the creation of faster 4G networks are a necessity to keep up with the current data demand, saying nothing about the increased demands that increasingly powerful smartphones will put on the network in the near future.

The bottom line is, while carries tout 4G as the future of wireless networks, better more efficient use of the available bandwidth—read 5G—is already quickly becoming a necessity. The reality is that carriers like Verizon are dancing the delicate market dance, telling consumers how great the latest smartphones are while quietly throttling their data plans in an effort to cut costs and save money.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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