The price war in wireless just got real.
Verizon introduced an unlimited data plan starting at $80 per month, as the carrier finally joined the rest of the industry in moving away from monthly data allowances, one of the industry’s most hated practices.
Smaller competitors Sprint and T-Mobile introduced slightly cheaper unlimited plans last summer, helping attract millions of new customers. Verizon had previously said it had no interest in unlimited plans, but its wireless customer growth tailed off at the end of last year.
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Under the new plan, which will be available starting on Monday, Verizon customers will get as much talk, text, and data as they like per line, though download rates may be slowed after 22 GB per line per month, similar to limits imposed by other carriers. But unlike Sprint and T-Mobile, Verizon said it would not downgrade the quality of streaming video for unlimited plan users.
Verizon (VZ) also maintained somewhat higher prices than its smaller competitors. The new plan starts at $80 for one line and goes up to $180 for four lines. Absent the occasional temporary promotion, Sprint’s (S) unlimited plan starts at $60 per line and goes up to $150 for four lines. The carrier started a limited promotion this week, offering 5 lines for only $90 per month for the first 12 months. T-Mobile’s (TMUS) unlimited plan starts at $70 and goes up to $160 for four lines. Last month, T-Mobile stopped adding surcharges and taxes as additional fees, effectively cutting its unlimited price by another 10% or more. AT&T (T) offers an unlimited plan starting at $100 for the first line and only to customers who subscribe to its DirecTV satellite service.
Many analysts had predicted Verizon would not offer an unlimited plan because it has relatively less available spectrum per subscriber than the smaller carriers. Customers on unlimited plans will likely use more data than when they were limited to just 5 Gb or 10 Gb per month, which would cause crowding on Verizon’s network.
But the carrier said it had added enough advanced equipment to handle more traffic. “We’ve built our network so we can manage all the activity customers undertake,” Ronan Dunne, president of Verizon Wireless, said in a statement.
Last month, Verizon conceded that wireless competition was biting harder than anticipated and told Wall Street not to expect its revenue to grow in 2017. New CFO Matt Ellis, asked about the possibility of Verizon offering an unlimited plan, gave a more open-ended answer than his predecessor, Fran Shammo, gave back in October.
“At this point in time, that’s not something we feel the need to do,” Ellis said. “But as I say, we continually monitor the market and we will see where we head in the future.”
Shares of Verizon have lost 7% since it gave the no-growth forecast on January 24.
AT&T offered unlimited data a decade ago, when it introduced the iPhone and other carriers followed. But later the industry phased out the plans as network speeds increased and customers began overwhelming all of the carriers’ networks.
Still, customers resented the difficulty of predicting in advance how much data they would use and the overage fee charges if they exceeded the allowances. A 2014 study estimated U.S. smartphone users were overpaying by $45 billion annually, largely because of the difficulty of picking the correct monthly plan in advance.
Verizon said it would keep several smaller data plans for customers who wanted to pay less, such as a 5 Gb per month plan for $55.