I wish I could say that I hate to say “I told you so,” but I don’t. When Verizon began carrying the iPhone last year, it made the mistake of offering an unlimited data plan. This was a dumb move, I argued then, because it was clear Verizon would later have to scrap this approach. Unlimited plans reward data hogs at the expense of everyone else: If you’re streaming puppy videos all day and I’m just surfing the Web, why should we pay the same rate—especially if your puppy videos are clogging the network and ruining my Web searching? It’s fairer—and, for most people, cheaper—if, like in everything else in life, we pay for only what we use.
Verizon has, predictably, killed the unlimited gimmick. This week the company unveiled a new wireless plan that offers several advantages over its old pricing scheme. First, Verizon’s new plans for smartphones and tablets do away with antiquated charges on voice minutes and text messages—now voice and text, which take up very little bandwidth on Verizon’s lines, are free and unlimited. (Verizon will still offer plans for “basic phones” that charge for voice minutes.) Verizon will now sell its plans by data tier—$50 for 1 GB a month, $60 for 2 GB, and $10 for each 2 GB thereafter. (If you go over the amount allotted in your plan, the charge is $15 per gigabyte.) The best part is that you can share the data service with all the devices in your household. So if you and your spouse both have a Verizon device and you each use about 500 MB of data per month, you can pay for just the $50 tier. The same is true if you’ve got a tablet and a phone—pay for data once, use it on both devices.
There is no way to get unlimited data under the new plan, and Verizon has made it very expensive for current unlimited customers to keep their cherished service. If you’re now on a Verizon unlimited plan and you want to stick with it, the only way to do so is to pay the full retail price of any new phone you buy. That is, instead of paying the “subsidized” price of $199 for an iPhone or another top-of-the-line smartphone, you’ll have to pay $649 or something similar.
I applaud Verizon for imposing this stiff restriction on unlimited plans. But there’s one nearly fatal flaw with Verizon’s new pricing—a catch so outrageous that it creates a big opportunity for the company’s rivals to step in with something more attractive. In an act of pure greed, the firm is charging a monthly “access fee” for each device you use. The fee is $40 for a smartphone, $30 for a basic phone, and $10 for a tablet. If you and your spouse each have a smartphone and share Verizon’s 1GB plan, you’d pay $130 a month—$50 for the data and $80 for the access.
Those enormous fees are completely indefensible. Just as it doesn’t cost my Internet provider if I connect 10 computers to my wireless router instead of just one, it doesn’t cost Verizon any more money to serve data to two devices instead of one. For Verizon, the only thing that increases its costs—and, therefore, the only basis on which it should charge its customers—is the amount of data people use every month. If you spread your 2 GB plan across 5 devices rather than 1 device, you ought to pay the same. Indeed, Verizon’s plan implicitly acknowledges this fact, because the company allows you to turn your device into a “mobile hotspot” for free. In other words, if I share my iPhone’s data plan with my iPad using the phone’s hotspot switch, I pay nothing extra to Verizon. If I want to connect my iPad to Verizon directly, however, I’ve got to pay $10 per month for that right even though I’d be using exactly the same amount of data in either case.
Now that Verizon has made its dumb pricing move, it’s time for AT&T or another competitor to offer something groundbreaking—what I imagine to be the perfect wireless plan. Here’s how it would work: First, you select a data tier. That’s it.
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