Verizon defends new shared data plans
- 14 June, 2012 10:09
The head of marketing at Verizon Wireless has defended the new shared data plans that take effect June 28 against criticism from some analysts and many outraged customers.
Steve Mesnick told Computerworld the Share Everything plans announced on Tuesday aren't being forced on existing customers and will mainly benefit workgroups and families with multiple smartphones who want to share data across as many as 10 devices.
"We're allowing the existing customer base to have a choice ... we're not forcing anyone to more to new plans... I take exception to [comments] of people leaving Verizon," he said.
One analyst said on Wednesay that Verizon mishandled the introduction of the new plans, which could hurt the company. But Mesnick said the announcement was made well in advance of the June 28 launch to give the public time to absorb a large amount of information that fundamentally changes how voice, text and data services are charged.
Mesnick said he's confident the plan will succeed, partly because Verizon interviewed 50,000 customers in advance to field their opinions. He provided Computerworld a chart showing how the new plan will affect monthly fees of various existing customers, and conceded that fees for "some people go up and some go down ... so people can make an assessment of wanting to switch."
Mesnick also admitted that Verizon knew that its decision to require current unlimited data users to pay full price for a new smartphone when they renew their contracts would cause a controversy. "We knew the unlimited news would be perceived negatively, so we weren't surprised," he said.
A "healthy percentage" of Verizon's smartphone customers currently have unlimited data plans, he said. In addition to needing to buy a new iPhone at full unsubsized price for $649 to keep unlimited data, he suggested they activate an older device they already own or buy an inexpensive one on eBay.
Mesnick, who oversaw creation of the new plans, said their central intent is "simplicity" so that a family or work group could predict how much they have to pay monthly instead of tallying several data plans on a single account. "What customers care about is 'what's my total bill at the end of the month?'" he said.
He emphasized that small business customers will desire the new plans because a single account can include friends or colleagues or "whoever you trust to be on an account."
Mesnick said negative comments on websites by customers were to be expected because the concept is broad and new. "We're changing the structure of wireless and everyone is getting their head around it," he said. "The press especially is having a tough time trying to understand it."
In addition to the numerous details of the plans announced Tuesday in a press release and on the Verizon Wireless website, Mesnick said Verizon will also offer a plan for basic phones that costs $40 a month for 700 minutes of calling, with texting and data extra. Also, first-time smartphone buyers will be able to qualify for unlimited calling and texting and only 300MB of data per month for $80.
The other plans published on Verizon's website call for a monthly line access charge per device, ranging from $10 for a tablet to $40 for a smartphone, with data service charges added on that start at $50 for 1GB per month, which can be shared across 10 devices.
Mesnick said that no other plan offers buying as little as 1GB for 10 users, which would be especially valuable for customers who use their smartphones for a lot of texting and calling and not as much for data. He said that most smartphone users want texting as well, which makes the unlimited texting feature of the news plans especially attractive.
As an example of the impact of the new plans, Mesnick said that two smartphone users under current rates with the lowest amount of voice minutes (700 minutes), plus unlimited texting and two separate data plans of 2GB each would pay a total of $160, but would pay just $150 under the new plan, with the added benefit of unlimited voice.
In a chart, Mesnick provided showing nine different examples of old and new usage plans, all the new shared plans would cost the same or $10 to $50 less per month.
The biggest savings, of $50, in the chart would be for an account with three smartphones, one tablet and one jetpack Wi-Fi unit that all together today costs $300 with 1,400 voice minutes and 13GB of data. Under the new shared plans, only 10GB would be expected to be shared, with unlimited talk and texting for a total of $250.
Mesnick didn't offer any examples of where the new plans would cost existing customers more, although he admitted some could, which would mean a customer might want to stay on an existing plan.
One Verizon customer, Michael Adams, contacted Computerworld to say that he indeed would pay 14.4% more under the coming sharing plans for his family's four smartphones and one basic phone. Today, on a Nationwide talk and text share 1400 plan, Adams pays $262.89 a month for all five phones and data (with three on unlimited data access), including phone insurance. Under the coming share plan, he would pay for 10GB of shared data with a discount of 20%, with unlimited voice and text, reaching a total of $300.96 with insurance, per month, an increase of $38.07, Adams said.
"Under this new plan our bill will go up an additional $38 a month, so it does not look like it will benefit multifamily households either," Adams said via email, noting that he works for a bank, and not a competitor to Verizon. "I agree that a lot of people will jump ship and abandon Verizon."
But Mesnick and some analysts noted that Adams and others like him have the option of staying with their current plans.
"I don't think these changes will cause Verizon to lose customers," said Roger Entner, an analyst at Recon Analytics. "All the existing Verizon customers don't have to change to Share Everything unless they are renewing to buy a phone with a subsidy."
Entner said Verizon is presenting a "very clean vision for the future, a future of connected devices where all of us have more than one device we connect. A lot of people who are complaining are thinking in a single device, single person-world."
Nonetheless, customers have begun mounting campaigns against the Verizon changes, including one Facebook group, created by Adam Diamond, called "Stop Verizon from Charging for Upgrades."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is email@example.com.
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