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Today, Verizon Wireless announced its new pricing plans for mobile phones and data. If you mostly use your phone for data, this is bad news.
Let’s look at the numbers. Imagine that you want a new smartphone plan. You use it for phone calls and for text messaging, but most of your use is mobile data. You may not need to imagine too hard, since that is how consumer behavior has been evolving for a few years.
A year ago, you probably would have chosen the 450 voice minute option ($39.99), the 250 text message option ($4.99), and the unlimited data option ($30). That’s $75 for more talk and text than you need (but the least you could buy) plus unlimited data.
Fast forward to today. With Verizon’s price structure today, you would probably choose the 450 voice minute option again ($39.99), the 1000 text message bucket ($10 - Verizon eliminated its lower buckets so you have to pay for more messages even if you do not need them), and 2GB of data ($30 - sorry, Verizon eliminated unlimited data in 2011). That’s $80 for more talk and text than you need plus 2GB of data.
And what happens at the end of this month? If you are still someone who uses a moderate amount of voice minutes and text messages but mostly uses data, get ready to pay more for less.
The good news: $40 will now buy you an unlimited amount of voice calls and text messages. That is $10 less than you were paying for your voice and text plans combined before, so even if you don’t plan on increasing your voice calling or texting you come out ahead.
The bad news: you might need those voice minutes and text messages because data just got a lot more expensive. The cheapest data option will let you pay $50 for 1 GB of data (according to Verizon's calculations, that's about 30 minutes of streaming video for the month). To replicate the amount of data you can buy today you need to pay $60 for 2 GB (which will give you an hour of streaming video, but then you can't use your phone for anything else until the next month).
Where does that leave you? The cheapest option Verizon now offers smartphone customers is $90 for half as much data as $80 buys you today. And in less than 12 months $30 has gone from buying you unlimited data to not even covering 1 GB.
This is just the latest example of wireless carriers increasing costs for consumers under the pretext of doing them a favor. There does not appear to be very much competitive pressure keeping carriers from raising prices for customers – which is part of the reason that we are against even more consolidation in the market.