This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Verizon's Decision to 'Manage' Unlimited Data Subscribers Could Benefit Sprint

NEW YORK (TheStreet) -- There was a time when Verizon  (VZ - Get Report), AT&T (T), Sprint (S) and T-Mobile (TMUS) charged customers by the number of minutes talked and the number of text messages sent. Those days are gone. Consumer behavior has rapidly shifted to data consumption over voice and text. In fact, data accounted for more than 50% of revenue for U.S. carriers in the first quarter of this year. Consumers are communicating via Twitter (TWTR), Facebook (FB), Snapchat, Pinterest, Viber and the list goes on. Talking and texting has become passe and U.S. carriers have adjusted their business models to the changing environment.

Companies like Sprint have embraced data consumption by offering unlimited data plans, while Verizon has discontinued unlimited data plans in favor of shared plans across multiple devices. However, if you were lucky enough to have an unlimited data plan on Verizon prior to 2012, you were grandfathered -- allowed to keep your plan and consume data unencumbered. However, that is about to change.

Read More: Warren Buffett's Top 10 Dividend Stocks

Verizon recently announced that, through its Inter-User Best Effort (IUBE) network optimization program, it would begin to manage the data of the top 5% of unlimited data plan subscribers.

What this means is, if you are in an area with a lot of network traffic, and you are on an unlimited plan, Verizon will reduce your data speed in favor of those who are paying by the gigabyte.

Verizon describes the top 5% as those who use 4.7GB of data per month. To put this into perspective, Netfilx  (NFLX) uses approximately 1GB of data per hour for a standard definition movie, 3GB per hour for an HD movie, 4.7GB per hour for a 3-D movie, and 7GB per hour for an ultra HD movie. In any case, if you stream more than one movie per month, you are in Verizon's top 5% and your data will be managed if you are on an unlimited plan.

There have been rumors for years that U.S. carriers were throttling the data of customers who engaged in activities that put a lot of stress on the networks like continuous streaming of video, music, and online gaming. But Verizon says that what it is doing is not throttling:

The difference between our Network Optimization practices and throttling is network intelligence. With throttling, your wireless data speed is reduced for your entire cycle, 100% of the time, no matter where you are.

Read More: 1 in 3 Americans Fears International Travel and Flights, Poll Shows

Once you go over 4.7GB of monthly data usage on Verizon's network, you will be subject to Network Optimization for that billing cycle and the next billing cycle but only when you are on a tower with a lot of network activity. Which begs the question, how will consumers know when they are on a busy cell tower? Verizon says:

There are many variables that can contribute to a cell site experiencing high demand including, but not limited to, the number of active users and the type of applications being used on that siteā€¦. these variables combined with other environmental factors determine whether or not a particular cell site experiences high demand at any particular time.  

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
S $4.77 0.00%
VZ $49.37 0.00%
AAPL $130.42 0.00%
FB $80.41 0.00%
GOOG $555.48 0.00%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs