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Leading the Charge? – Verizon??????????

Verizon Leading the Charge - Unlimited Plans

Verizon is known as being the most expensive phone carrier and many would say with good reason. That reason may not always be valid but Verizon has proven itself to many. Recently something non-characteristic of Verizon has occurred and it can pose a real problem to Verizon’s competitors.




The unlimited plan has been shunned by Verizon for years. Unlimited plans were too data-greedy for Verizon’s tastes and yet they have announced straight up from out of nowhere that it would start offering an unlimited plan again. This move marks the first time since in 2011 when Verizon discontinued the unlimited plan in their effort force customers into tiered data plans.

The result, T-mobile, Sprint, and AT&T have day laters followed suit by offering new unlimited plans also. So why would Verizon perform a military about-face in their stance on the unlimited plan? I say this because I remember a commercial where Verizon argued basically that unlimited plans costed a lot and forced consumers to pay for data they would never use. To me the commercial was nonsense (using a better word) and just some attempt to move people from the obviously better choice plans that their competitors offered.

“At the end of the day the majority of people don’t need unlimited plans. But the people who use unlimited plans can be abusive, they can really wreak havoc to your network. And at the end of the day as we launched LTE, I continue to say you cannot make money in an unlimited video world.” Fran Shammo, Verizon CFO, 9/22/16

I needed to understand this new move from Verizon cause they are still the Big Red (Dog) of the cellular industry. People despite the extra cost still flock to them for their service and they know it.

“When the competitive world launches new price plans — and this quarter it was around unlimited and, obviously, we did not respond to that. But as I’ve said, there’s going to be a two- to three-week period of time where there is an impact to our growth. And we saw that. But, as I’ve always said, after that three weeks everything kind of normalizes back out.” – Fran Shammo, Verizon CFO, 10/20/16

I thought well T-Mobile has been improving since all the changes they have made but are they doing that well? I have not really heard much from AT&T and Sprint there are talks of a possible merger with T-Mobile. Fact is  that Verizon still has more customers than say T-Mobile despite their rise and are only nibbling at Verizon’s feet. What I found is alot of data that suggests a continued decline in Verizon with a continued and gradual increase in other companies like T-Mobile. I will literally quote Walter Piecyk from BTIG Research:

Verizon’s Q2 results were marred by weak ARPU, which could have been a result of losing high-end customers to unlimited rate plans of competitors. We noted this while cutting our wireless EBITDA estimate by $2.0 billion less than a month ago. (Link) Since that time, T-Mobile has offered tax-free rate plans and Sprint cut rates on its Unlimited Freedom plan. The downward EBITDA revisions also happened after Verizon eliminated the option for consumers to purchase phones on subsidized rate plans, a move that we think generated a $1.5 billion non-cash benefit to reported EBITDA, the metric that our peers use for valuation. The bottom line is that it appears that Verizon’s perceived network advantage is no longer strong enough to keep its best customers on unattractive rate plans and it was forced to respond. We look forward to getting updated from T-Mobile on how porting ratios fared when they report Q4 tomorrow.

He has also tweeted on T-Mobile’s Porting Ratio verses Verizon’s.

Since T-Mobile has made their changes they have only improved in their numbers.

So T-Mobile has literally forced the industry into their space and now Verizon has finally jumped the bandwagon. See last quarter T-Mobile gained about 1.3 million new customers which is double the amount Verizon had at around 590,000. This along with a continued decline (yeah I said it again) in revenue every quarter last year Verizon I believe had to make that jump to offering unlimited plans. Problem is the competition has also made some changes.

T-Mobile Response

T-Mobile upgraded its own unlimited plan to match Verizon’s, and adds HD video streaming and 10GB of LTE tethering including also a limited-time discount. If you compare the plans, they are the same unlimited with full-speed data on everything (including HD video and 10GB of LTE tethering) backed by unlimited 3G speeds. But, T-Mobile made a slight improvement by de-prioritizing data after 26GB with Verizon’s doing the same at 22GB. T-Mobile having the cheaper plan at $70 for a single line, $100 for two, and $160 for four lines (including all taxes and fees) while Verizon, charges $80 for one line, $140 for two, and $180 for four.

Sprint Response 

Sprint, who copied T-Mobile somewhat in the past by also offering an unlimited plan but with more restrictions now continues the copying but adds similar tethering and HD video features packed into a cheaper deal in an attempt to beat the competition. Sprint’s plan though is more diluted offering unlimited data, but game streaming is capped at 8Mbps speeds while music tops out at 1.5Mbps. When a customer has used up their 10GB of LTE tethering, Sprint knock them down to 2G speeds, not 3G. It is currently the cheapest plan for $50 per month (plus taxes and fees) and a great deal that gets five lines for $95 (plus taxes and fees) per month which will last until March 31st, 2018.

As for AT&T, no point really in mentioning them at this time. They offered a $100 a month unlimited plan to only their DirectTV customers in the past and has only now made that plan available to everyone making it the most expensive plan now with less to offer. So to conclude, competition is good for anyone looking to buy a phone now. Well I would say a face value mainly cause of all the bills that people have to pay now a days. A cellphone bill with data is redundant when one has to also buy internet at home too but competition will hopefully continue to bring those bills lower and lower. Can you feel me on that?



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