FORTUNE — First the wireless carriers grew revenue by selling all of us basic cell phones. Then they kept growing as we all upgraded to fancier smartphones that used data plans and not just voice calls. But that can’t last long: 77 million people already own smartphones in the U.S., and the market will start to become saturated in a few years. So what will carriers do when that happens?
We are starting to find out, and the answer isn’t pretty. AT&T T, T-Mobile and now Verizon VZ have abandoned their unlimited-data plans in favor of tiered pricing. To hear the carriers tell it, it’s a reasonable offer. As one Verizon official put it, “If you drive a car, you drive 50 miles, you pay for gas for 50 miles.”
As many reports point out, 95% of Verizon Wireless customers are currently in the lowest-priced tier right now, using less than 2 gigabytes of data each month. And besides, Verizon customers who are grandfathered into unlimited data plans won’t even face the data caps until they renew their contracts.
The catch is, this is just the start. As reasonable as this all sounds, what it really tells us is that Verizon and other wireless carriers are simply planning ahead a few years. And here’s where Verizon’s gasoline analogy is really handy. Five years ago, when gasoline cost less than $2.50 a gallon, many people bought cars without much thought to gas mileage. This year, with gas prices flirting with $4 a gallon, many drivers are feeling pinched. Many are trying to drive less. And yet oil companies are enjoying higher profits – and higher stock prices.
For now, smartphone owners aren’t complaining about the new data caps and tiered pricing plans. But this could change in a couple of years. The mobile web is evolving in ways that will guarantee we use much more bandwidth than we do today. It’s really what the cloud is all about – moving your music onto Apple’s AAPL or Google’s GOOG data centers, streaming movies from Netflix NFLX, TV shows from Hulu and baseball games from MLB.com. Thanks to recent moves from Google and Facebook, voice calls won’t be enough: We’ll talk instead using video chat.
When that happens, 2 gigabytes won’t be enough anymore. It’s going to require a lot more gasoline, and the price of that gasoline is going to get expensive. Verizon customers whose contracts renew in the next year or two won’t be grandfathered into the unlimited-data plans anymore. They’ll face pricing tiers too. And by then, there will in all likelihood be two major wireless carriers in the U.S.: Verizon, and a combined AT&T/T-Mobile.
Of course, the competition between these two rivals could in theory force them into a pricing war. But recent history suggests the opposite is likely to happen. AT&T and Verizon have changed pricing policies almost in lockstep. In 2009, Verizon doubled its early-cancellation fee to $350; a few months later AT&T boosted its cancellation fee to $325. And now Verizon’s tiered-pricing echoes in many ways a plan introduced by AT&T this year.
Both companies already have comparable fees for data plans: AT&T charges $25 a month for 2 gigabytes of data and $45 a month for 4 gigabytes with tethering. Verizon’s fees suggest it’s not planning to compete on price – if anything, it’s willing to charge higher prices: $30 a month for 2 gigabytes and $50 a month for 5 gigabytes.
And as bandwidth demand grows, carriers will have to build out their networks. They’re likely to pass that cost onto their subscribers, which means the monthly rate of roughly $10 per gigabyte could escalate. And there would be little to prevent this.
Higher wireless fees will be unwelcome news for people who love their smartphones. But it should make investors very happy. Especially Verizon investors — the combination of Apple technology and Verizon’s networks is so popular that, since the two were combined, the market share of Android phones has started to erode.
Verizon’s stock has been on a tear, rising 40% in the last year to $37 a share, against a 25% gain in the S&P 500. That’s an unusually strong gain for a company that offers investors a 5% dividend. And thanks in part to the data caps, Verizon shares could rise even further. Richard Dineen, an analyst at HSBC Global Research who has a $43 price target on Verizon, estimates that tiered pricing could add 3% to Verizon’s revenue by 2015.
“The startlingly uniform behavior of operators in abandoning unlimited plans and moving to volume-based tiers en masse indicates the emergence of a new era of pricing power for mobile data,” Dineen wrote in a July 7 report. “Coming from a legacy of zero pricing power in mobile voice, this is a very positive development for mobile stocks.”
Very positive, indeed. Unless you are unlucky enough to be a Verizon Wireless subscriber. But don’t expect much relief from AT&T either. First the wireless carriers got us hooked on smartphones, next they’ll get us used to high-bandwith applications. After that, they will start making us pay – and there will be little we can do about it.