The wireless leader
Verizon Communications Inc.
) is slowly scrapping its unlimited data plans. Verizon puts a cap
on its unlimited data plans with smartphone upgrade.
The company abolished unlimited data plans for all customers,
who intend to upgrade their smartphones with the new high-speed
data services (4G) at a discounted price. Verizon allows full
price-paid customers to keep its unlimited plans with a flat
monthly fee of $30. However, these customers have to shift to the
shared data plan, when it becomes available in mid summer.
Customers are disappointed with this policy, as it compels them
to pay more either in the form of service fees or smartphone
On the other side, the move would be beneficial to Verizon. As
the cell phone markets are saturated and customers are hungrier for
data rather than voice, the new strategy will boost the company's
future data revenues. The company will also be able to pass on some
subsidy cost related to
) iPhone to its customers in the form of service fees. This will
lead to reduced expenses.
Verizon had already switched to tiered-data pricing plans from
the unlimited data plans in June last year. However, the old and
existing subscribers are still using the unlimited plans. Verizon
is the first carrier, which is scrapping its unlimited plans for
its existing customers.
Its major rival
) still offers unlimited plans on smartphone upgrade but with
certain limits, imposed two months ago. AT&T said that the data
speeds on unlimited 3G and 4G smartphones would slow down when it
exceeds more than 3 gigabytes (GB). The 4G LTE speeds will also
lessen beyond 5GB in a particular month. The third largest U.S.
Sprint Nextel Corp.
) continues to offer unlimited plans when subscribers upgrade their
We are maintaining our long-term Neutral recommendation on
Verizon. Currently, the stock retains the Zacks #3 (Hold) Rank for
the short term (1-3 months).
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