Verizon to kill unlimited data plans for existing subscribers

(Credit: Roger Cheng/CNET)

Verizon Wireless subscribers who have held onto their $30-a-month unlimited data plans will soon be forced to upgrade to a new tiered offering the company plans to launch this summer, according to the Web site Fierce Wireless.

Speaking at the J.P. Morgan Technology Media and Telecom conference today, Verizon Communications CFO Fran Shammo told investors that the company's 3G unlimited data plans that customers were allowed to hang onto last year when Verizon switched to a tiered offering will soon go away entirely. Instead, the company will migrate its existing and new 4G LTE customers to a new "data share plan."

The company has yet to announce the details of this new plan, but it has said previously that the data share plan will be introduced in midsummer. The plan will allow people on the same family plan to share buckets of data each month, much like they share voice minutes and text messaging. It will also allow individuals to share data across different 4G LTE devices.

Verizon eliminated its unlimited data plan for smartphone users last July, about a year after AT&T had done the same thing. Like AT&T had done previously, Verizon told its existing unlimited data plan customers that they could keep their unlimited data plans even after their contracts expired. And Verizon has allowed its 3G wireless subscribers to upgrade to 4G LTE devices, while keeping their unlimited data plans.

"Everyone will be on data share," Shammo said, according to Fierce Wireless. "When they migrate off 3G they will have to go to data share. That is beneficial to us."But the company was always careful to say that it could change this policy in the future. And now it looks like that day has finally come. The way it will likely work is that as 3G unlimited contracts expire, Verizon will push subscribers to upgrade their devices to smartphones on company's 4G LTE network. These customers will then have to sign up for the data share plans.

Verizon hasn't yet announced pricing details of the new share plans. Shammo said that he believes this new plan will make it easier for families and small businesses to connect multiple devices, Fierce reported. This new plan is meant to encourage people to buy multiple connected devices and to use them on the 4G LTE network, without signing up for an additional data plan.

As this change happens and people connect additional devices to their accounts, Shammo said that the industry will have to change how they account for the revenue. Instead of looking at average revenue per user, he said that the industry should look at average revenue per account.

News of the end of the unlimited data plan is sure to upset some consumers who have held onto their existing accounts specifically for the unlimited benefit.

AT&T also offers this benefit to longtime smartphone customers. But the company has struggled to keep up with the demands of some of these users. In an effort to ensure that "grandfathered" unlimited users don't hog the network, the company began slowing down a proportion of these heavy users. The move outraged many customers. One man sued AT&T in small-claims court and won. AT&T has since changed its policy and now only slows down or throttles users if they exceed 3GB of data per month.

Meanwhile, T-Mobile USA and Sprint Nextel still offer unlimited data plans. T-Mobile also slows down users if they consume too much data each month. But Sprint claims that it is the only major wireless carrier in the U.S. to still offer unfettered unlimited data. Some people question how long the carrier will be able to offer such a plan given the steep rise in data usage.

Verizon issued this statement on Thursday morning:

As we have stated publicly, Verizon Wireless has been re-evaluating its data pricing structure for some time. Customers have told us that they want to share data, similar to how they share minutes today. We are working on plans to provide customers with that option later this year.

We will share specific details of the plans and any related policy changes well in advance of their introduction, so customers will have time to evaluate their choices and make the best decisions for their wireless service. It is our goal and commitment to continue to provide customers with the same high value service they have come to expect from Verizon Wireless.

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