June 22, 2011 | by Andrew Kameka
Verizon made it clear months ago that it would introduce tiered data prices – meaning you pay more to get more – as the carrier rolled out its 4G LTE network. Verizon recently confirmed the pricing structure, set to go into effect July 7, and showed that a premium price is necessary for a premium network.
But how much of a premium are customers willing to pay? I’ve avoided AT&T because of poor service in my area, and passed on Verizon because its plans were too costly. I can now afford to pay the extra costs of a Verizon contract and am considering signing-up for one just so I can be grandfathered in to an unlimited data plans. Despite Verizon not offering anything on my dream phone wishlist, I’m considering forsaking my “must-have” desires of dual-core processors, big screen, and great cameras all for the sake of saving a few bucks.
How hypocritical but so very human of me. It turns out plenty of American consumers share my penny-pinching ways. Despite the appeal of 4G, 65 percent of smartphone users polled by Morpace cited price as the number one factor in their decision to purchase a new phone. Networking capability (strength, stability, etc.) was rated as a critical factor for 58 percent of users, and 51 percent of users cited touchscreen capabilities. Screen size, brand, and current contract followed.
How important was data plan pricing? Only 29 percent of respondents cited that as the most important factor. That’s why Verizon and AT&T are willing to introduce data plans that are far less-consumer-friendly than current options. If T-Mobile or Sprint could get away with charging as much as the top carriers, they would.
Verizon’s new pricing structure asks subscribers to pay more to get less at a time when users are being encouraged to consume data. “Listen to Google Music, watch Netflix, and video chat on Skype!” users are told. However, the message should really be “Listen to Google Music for 15 hours a month, watch only 1 Netflix movie, and limit your Skype conversations to Wi-Fi whenever possible, because that’s all your data plan will allow.”
People want a better network and more free reign to explore the web, but carriers will make them pay more for the privilege. Most consumers seem prepared to accept that reality and will make purchasing decisions that make the most sense for their wallets. However, when the data caps start falling lower and the features become too enticing to resist, will more smartphone buyers loosen their purse strings?