Verizon Wireless confirmed Tuesday that the carrier will move from unlimited to tiered data plans, beginning next month. The change won't have an immediate impact on subscribers currently under contract, but new customers and renewing subscribers will need to choose from a slate of data-capped options at prices to be announced next month.
Verizon's looming switchover comes as mobile data usage continues to grow at an astounding pace. According to a new survey by Nielsen, smartphone owners -- especially those with iPhones and Android-powered devices -- are consuming more data than ever.
"This has huge implications for carriers, since the proportion of smartphone owners is also increasing dramatically," the firm's researchers wrote in a recent blog. "Currently, 37 percent of all mobile subscribers in the United States have smartphones."
An Opportunity for Sprint
Some industry observers believe Verizon's move will encourage some customers to switch from smartphones to Wi-Fi-only media tablets to reduce monthly costs. However, the full impact of the change isn't likely to register immediately with the majority of Verizon subscribers.
"Given the nature of contacts, this won't impact current individual-liable subscribers in the near term -- until those contracts expire," noted Lisa Pierce, an independent analyst at the Strategic Networks Group. "For the same reason, it won't have any immediate impact on corporate-liable subscribers."
Longer term, Verizon subscribers' use of Wi-Fi will undoubtedly increase, Pierce observed. "I highly doubt that Sprint will move away from offering an 'all you can eat' plan, so that's another alternative," she added.
There is reason to think that Sprint Nextel will benefit from Verizon's switch to tiered data plans. According to the latest American Consumer Satisfaction Index (ACSI), Sprint tied with Verizon with a 72 score -- the highest reported among the major U.S. wireless carriers.
However, Verizon dipped one percent for the second straight year, while Sprint's score has risen 15 points over the past three years and now claims a share of the industry lead. What's more, in the wake of the proposed merger announcement by AT&T and T-Mobile the ACSI scores of both carriers fell four percent to 66 and 70, respectively.
For AT&T it was the worst score since 2006 -- the year before the carrier's launch of the first iPhone. "Assuming the [merger] deal is approved, it remains to be seen if a much larger AT&T can regain the strength of its customer relationships," said Claes Fornell, who founded the ACSI at the University of Michigan's Ross School of Business.
According to Nielsen, the amount of data consumed by the average smartphone user each month grew 89 percent to 435MB in the first quarter, compared to year-earlier results. "A look at the distribution of data consumption is even more shocking," Nielsen researchers wrote.
Data usage for the top 10 percent and one percent of smartphone users rose 109 percent and 155 percent, respectively. What's more, devices running Apple's iOS and Google's Android platform are clearly driving the upsurge.
Mobile subscribers with Android-based smartphones consumed an average of 582MB per month, while the average iPhone user consumed 492MB. Nielsen also noted that monthly mobile data consumption among Windows Phone 7 users doubled over the past two quarters, "perhaps due to growth in the number of applications available," the firm's researchers suggested.