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As data gets cheaper for Verizon to transmit, customers are paying more

Zach Epstein
January 23rd, 2013 at 10:50 AM
Verizon Shared Data Plans Analysis

Verizon (VZ) posted a pretty impressive holiday quarter (one-time charges aside) with a good outlook on Tuesday, and the company’s share price rose as a result. There were also plenty of interesting takeaways from the carrier’s earnings call, but The New York Times’ Brian X. Chen zeroed in on one item of particular interest. Verizon launched new “Share Everything” plans last summer that make smartphone data more expensive for many users. The best thing about these plans for investors — and, not coincidentally, the worst thing about the plans for subscribers — is that Verizon is now making more money off of smartphone data as costs associated with transmitted that data are falling.

As Chen noted, Verizon’s average monthly revenue per wireless account grew 6.6% to $146.80 in the holiday quarter. The main reason for the growth is simple: 23% of Verizon’s wireless accounts are now subscribed to Share Everything plans.

The beauty of Verizon’s new plans, as the report points out, is that data is getting cheaper for Verizon to transmit even though the carrier is charging more for it. “The company says the 4G LTE network is five times more efficient than its predecessor, 3G,” Chen wrote. “That means the more people who buy devices that connect to the newer network, like the iPhone 5, the more money the company will eventually gain.”

As an added bonus, Chen noted that Verizon’s faster data networks also cause users to eat through their data allowances more quickly. This eventually prompts them to buy more expensive plans with higher data caps, which of course net Verizon even more cash.[bgr-post-bug]

Zach Epstein

Zach Epstein has worked in and around ICT for more than 15 years, first in marketing and business development with two private telcos, then as a writer and editor covering business news, consumer electronics and telecommunications. Zach’s work has been quoted by countless top news publications in the US and around the world. He was also recently named one of the world's top-10 “power mobile influencers” by Forbes, as well as one of Inc. Magazine's top-30 Internet of Things experts.




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