Verizon Avoids ‘Unsustainable’ Unlimited Data

by Matt Klassen on September 25, 2013

Unlimited data plans are unsustainable, or so Verizon CEO Lowell McAdam believes. During an investor conference earlier this week, McAdam noted in reference to Sprint and T-Mobile’s aggressive unlimited data offerings, that such a mobile strategy was unsustainable, assuring investors that while subscribers may be looking towards unlimited now, those companies won’t be able to sustain such an approach in the long run. “With unlimited, it’s the physics that breaks it,” he said. “If you allow unlimited usage, you just run out of gas.”

It was clear from McAdam’s address that the company is feeling at least some pressure from investors to delve back into unlimited data, with both Verizon and AT&T having abandoned the last vestiges of their respective unlimited data plans last year. But even with Sprint going as far as to guarantee unlimited data for life, Verizon isn’t about to buckle.

In fact, McAdam made it clear that Verizon will never play the unlimited game again, for not only is it unsustainable, but Verizon sees no need to even compete with the likes of Sprint or T-Mobile, as Big Red is four or five years ahead of both those companies in 4G LTE development. Verizon’s stance: When those companies crumple under the data pressure of 4G and later from 5G, we’ll see who gets the last laugh.

From Verizon’s perspective, current unlimited data plans are simply mobile marketing gimmicks designed to lure subscribers away from the reliability and coverage of Verizon or the speed of AT&T. As mobile data moves increasingly towards video domination—particularly as video communication becomes the norm—companies like Sprint and T-Mobile will not be able to continue to offer unlimited data, McAdam argued, they simply don’t have enough spectrum to handle such a data load.

In fact, the only reason Sprint and T-Mobile are able to offer unlimited data is because of their respective fledgling networks. Touting Verizon’s network superiority, McAdam noted that Big Red, while only a year ahead of AT&T in network development, is several years ahead of its smaller rivals, inferring that once Sprint and T-Mobile catch-up to where Verizon is now, they’ll scrap their unlimited plans as well.

There was some concern, however, regarding Verizon’s other attempt to match the shrewd marketing moves of its smaller rivals, the company’s Edge earlier upgrade program. While Edge has allowed Verizon customers to have quicker device turnover, putting more money in Verizon’s pocket, Big Red has come under fire for the fact that it requires customers to pay the full cost of the device and service plan, compared to the discounts offering by Sprint and T-Mobile.

If there was one overarching message to investors in McAdam’s address it was this: it doesn’t matter what other companies are doing, because Verizon remains firmly planted atop the American wireless market. Companies can offer unlimited plans, affordable early upgrade plans, heck, they can offer whatever they want, but customers will return to Verizon time and again because Big Red consistently offers the one thing customers really want: network reliability.

Of course such a message may be cold comfort to investors this year, as it looks like AT&T may have finally supplanted Verizon as the ‘most reliable’ network, but given the cocksure tenor of his speech, I’m sure McAdam would have us all believe that like unlimited plans, that’s not really sustainable either, is it?

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

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