Verizon Wireless Unveils Unlimited Calling Plan
Published on: 18th Feb 2008
Note -- this news article is more than a year old.
NEW YORK (Dow Jones) Verizon Wireless unveiled an unlimited flat rate calling plan on Tuesday in a bid to attract high end customers.
Under the plan, for $99 a month subscribers can use their handsets to call anyone in the U.S. at any time. The plan is being hailed as an illustration of how wireless voice service is turning into a staple service, like its old-fashioned tethered long-distance and local voice counterparts. In moving toward this plan, the carrier hopes to win over so-called "power users" from its rivals. But the competition will likely counter with their own unlimited plans.
"I'm certain AT&T will react," said William Ho, an analyst at research firm Current Analysis. "AT&T, the biggest competitor to Verizon, is bound to match."
The move, which Verizon Wireless calls a "game changer," may set off cheaper unlimited wireless plans and accelerate the commoditization of wireless voice service down the line.
But wireless carriers have seen their voice revenue growth stagnate amid stiff competition. Instead, players such as Verizon Wireless look to data services such as text messaging, photo transfers and music downloads for growth.
"Voice is the foundation of our business, and will be an integral part of our offer," said Mike Lanman, chief marketing officer for Verizon Wireless. "Data is clearly emerging as an increasing contributor...to our revenue stream."
The carrier hopes the plan will attract high-end customers looking for a consistent cellphone bill. Lanman acknowledged the $99 plan isn't cheap, and expects "power users" sign up for the service. Both consumers and business customers will be able to sign up for the plan.
"The market (for high-end users) is getting bigger as people rely more and more on wireless," he said.
The move breeds customer loyalty and locks them down for longer contracts, Ho said. Volume subscribers already with Verizon Wireless will have more of a reason to stay, and heavy users on other services may see the unlimited plan as an attractive alternative.
In launching this plan nationwide, Verizon Wireless beat rival Sprint Nextel to the punch. There have been rumblings that Sprint was considering a similar move to differentiate itself. New Chief Executive Dan Hesse is a fan a simplification, and pioneered the flat-rate plan at the old AT&T Wireless in the late 1990s. He brought that vision as the CEO of Embarq before taking the reins at Sprint.
Indeed, the company has its Sprint Unlimited Access Pack, which offers unlimited voice calling, text messages, Web browsing and email for $119.99, in select markets. It, however, is only available in parts of Northern California, Philadelphia, Minneapolis and Tampa.
No plans to expand the offer have been announced, said Sprint spokeswoman Emmy Anderson.
"Verizon knows this is coming and they're getting ahead of it," Ho said. Sprint will almost certainly have to expand that offering now that Verizon Wireless has made its move, he added.
Other flat rate plans are already available in limited fashions. Sprint's Boost Unlimited service offers a monthly $45 plan that allows for unlimited calling to anyone in the U.S., but the caller must stay within a specified home region.
For $109.99, T-Mobile USA subscribers get 2,500 anytime minutes in addition to unlimited nights and weekends.
AT&T, meanwhile, declined to speculate on future plans, but the carrier doesn't offer an unlimited plan right now. It does offer plans for unlimited text messages for $20 and Internet surfing for $15.
"We think we already have clear and understandable plans," said spokesman Mark Siegel.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; email@example.com
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