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Verizon Wireless followed both AT&T and T-Mobile last week to become the third major US carrier to adopt tiered data plans. We all remember the “bill shock anxiety” we faced every month wondering about minute overages and excess charges on our bill. Now, in the early days of high-speed 4G data offerings, we’re beginning to see it again. This industry trend of using tiered data plans portends a less competitive wireless marketplace in the post-AT&T/T-Mobile merged future.
Consumers don’t know a gigabyte from a mosquito bite
Pricing by the gigabyte simply does not mean much to consumers. What if my son leaves Pandora streaming in the back seat of the car for 5 hours? What data services are running in the background of my device, and how many megabytes do these services use? Am I connected to WiFi or not? Consumers don’t want to be burdened by these thoughts, nor do they want to constantly monitor their data usage after installing new apps or using new web-based data services.
New smartphone users will live in fear of overages
More and more people are dropping their feature phones and switching to smartphones. Nielsen recently reported that 55 percent of those who purchased a new handset in the past three months reported buying a smartphone instead of a feature phone. These new customers lack the historic usage data and/or the grandfathered unlimited plans available to the 38 percent of wireless subscribers currently using a smartphone. Their first experience with ‘broadband-like’ data is one of uncertainty. They will avoid using the innovative new apps and services to their fullest extent because of an inability to clearly understand the complex pricing options available.
We have to question why the carriers are choosing to create this “bill shock anxiety” all over again. Why now? At a time when data services are becoming more and more popular, why are carriers choosing to make these services less and less accessible?
I’ll see your data cap and raise you 5 dollars
AT&T’s planned acquisition of T-Mobile will reduce the number of national postpaid carriers. AT&T states that its acquisition of T-Mobile will speed its ability to offer 4G services nationwide. But at what cost to the consumer? How many of us will be able to afford it? There is no longer a truly competitive wireless marketplace and pricing actions like these are indicative of what’s to come. Will AT&T now match Verizon’s data pricing? Will Sprint add tiered data pricing?
In a more fragmented, competitive market, carriers would offer “reasonably” unlimited data services at about $25 per month. If AT&T’s acquisition of T-Mobile goes through, however, when it comes to future pricing wars, all bets are off.
Delly Tamer is founder and CEO of LetsTalk.com, an online retailer of cell phones, wireless devices and service plans.