Monday, July 14, 2014

Verizon Wireless to Launch LTE Service for Prepaid Customers

Leading U.S. operator Verizon Wireless is scheduled to begin including LTE service with its prepaid plans starting on 17 July. The Verizon Allset prepaid plan starts at US $45.00 for smartphones, which includes unlimited voice/SMS and 500 MB of data. Customers can purchase Bridge Data packs at US $5.00 for 500 MB, US $10.00 for 1 GB and US $20.00 for 3 GB. Additionally, Verizon has been running a promotion which offers customers who sign up for auto pay an additional 500 MB of data. Combined, a customer could have unlimited talk and text plus 4 GB of data for US $65.00—which is significantly less expensive than its postpaid More Everything plan, which includes the same services. Verizon Wireless is the final US Tier 1 operator to include LTE service with its prepaid offers. AT&T, Sprint and T-Mobile have made this service available since early 2013. Verizon Wireless has yet to announce if its prepaid plans will have their maximum LTE capped (as is the case with AT&T) or if they will run at the network’s top available speeds.

This announcement can be seen as further evidence of the saturation of the U.S. mobile market. Verizon had long focused almost exclusively on driving customers into postpaid 24-month contract plans, relying on its superior network reliability to compensate for its higher prices. While this strategy will still generally remain in place (Verizon’s prepaid plans will still be more expensive than those of its rivals), it appears that the operator has been forced to become much more flexible. Compared with the first quarter of 2013, Verizon saw its postpaid subscriber adds decline by 20 percent and its prepaid customer adds down 76 percent. Beyond the general saturation at the high end of the U.S. market, a confluence of factors has worked against the operator: the availability of better preowned smartphones that do not necessitate operator subsidies, increasing consumer discomfort with committing to long contracts and aggressive smaller operators (particularly T-Mobile) willing to push the envelope in terms of price and included plan features. It appears that its increasing marginalization in the more dynamic prepaid market finally forced Verizon Wireless to risk cannibalizing its own postpaid revenues by offering LTE-enabled prepaid plans.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:

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