A bombshell announcement this morning from Verizon Wireless could shake up the industry.
Verizon Wireless, a joint venture of Verizon (VZ - Get Report) and Vodafone (VOD), is known for charging some of the highest rates in the U.S. for its wireless services. Now it has decided to shock the industry and begin offering flat-rate, all-you-can-talk plans. Prices begin at $99.99 a month.
Heralded in full-color, full page newspaper ads, Verizon Wireless is now offering one-price, unlimited calling plans to new subscribers.
The new "Truly Unlimited Calling" plans boast:
- Unlimited, anytime minutes to anyone in the U.S., even when calling another network or landline.
- Talk as much as you want.
- Mobile Web 2.0 (HTML) browsing.
- No domestic roaming or long distance charges.
There are actually three new plans. The Basic Plan for single line phones is $99.99 per month. The Select Plan adds unlimited messaging to anyone, on any network, in the U.S. is $119.95 per month and the Premium Plan, which adds V Cast and VZ Navigator services as well as Mobile Email (and unlimited domestic messaging from the Select Plan) will sell for 139.99 per month. Family SharePlans are also priced accordingly. Data, sent or received, including what Verizon Wireless calls Mobile Web ads, is an additional $1.99 per month per MB with the first two plans -- and free with the premium plan. Fees, taxes (some of which can run as much as 35%) and activation fees are, of course extra. So are international calls and just about anything else you can think of. This could turn out to be a clever marketing scheme. But, I'm sure Verizon Wireless did its homework in advance. It's probably not counting on losing money by offering these larger "full bucket" service plans. For its current, high-paying, heavy-use customers using their cellular phones for most or all of their voice calls it's a great deal. On the other hand, the vast majority of cellular users opt for the lowest-priced phones and monthly plans. Although this new offer might not sway all of them to switch, it could appeal to people who are currently paying, say $60 or $70 per month for far fewer minutes. Every customer who switches will be paying Verizon more per month. That marketing ploy could help Verizon's bottom line. It will also be interesting to see how other wireless carriers react. Trying to match, or beat, Verizon's new plans could be a problem for Sprint (S) (still reeling from their purchase of Nextel) and maybe even T-Mobile (DT) (the company which usually offers the most user-friendly prices). Verizon Wireless says its "Truly Unlimited" calling plans are a limited-time offer. I can assure you if they're successful, they'll be around for a long time.