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Commentary: Beware of Verizon’s new service plans

By Troy Wolverton, San Jose Mercury News –

The new “Share Everything” plans Verizon Wireless announced Tuesday have a catchy name and a cool concept — but they’re a crummy deal for many consumers.

That’s because many users will end up paying more for their service under the new plans. Hardest hit will be some of those who put the least burdens on Verizon’s network — those who do little talking, texting or Web surfing on their phones. But more active users may see their bills go up as well.

Overall, the move appears to be a price increase tarted up to look consumer-friendly.

The new plans, which will go into effect later this month, are undeniably simpler than what consumers have had to contend with in the past. Most consumers have had to choose from a complicated array of options, customizing their plans based on how many phones they had, how much they talk on them, how many text messages they send and how much data — if any — they use. Tablet or laptops that customers wanted to connect to the service had their own, separate plans.

The Share Everything plans streamline these choices. All customers will get unlimited voice minutes and be able to send an unlimited number of text and multimedia messages. Customers buy buckets of data bandwidth that they can share among up to 10 different devices. They can even use their phone or tablet as a mobile hotspot at no extra charge. The only real choices come in how many and what kinds of devices you want to connect to the service and in how much data you plan to use.

As the number of wireless broadband devices in consumers’ homes has proliferated, the idea of allowing those gadgets to share their wireless data has gained increasing attention. It makes a lot of sense to allow consumers to use their wireless devices much as they do those that are connected to the wired Internet.

But under Verizon’s plans, be prepared to pay for that simplicity.

Let’s say that you have a smartphone that you use lightly and have signed up for one of Verizon’s lower cost plans. You might spend $70 a month if you don’t do any messaging or $80 a month if you send or receive up to 1,000 messages.

Under the Share Everything plans, you’d be spending at least $90 — and that’s for only 1 gigabyte of data, compared to 2 gigabytes under the old rates. If you wanted the same 2 gigabytes of data, you’d be spending $100.

Now, let’s say you have a family plan with three smartphones, again assuming light usage. Under the old rate structure, you might be paying $170 without any messaging and about $190 with 1,000 messages for each phone.

Under the new plans, you’d have to spend $200 to get the same aggregate amount of data — 6 gigabytes — that you got under the old plan.

One reason the new plans will be pricier for many consumers is that Verizon has greatly increased the prices it charges for data — up to twice as much in some cases.

Verizon and the other wireless carriers have long complained about the stress they are under to keep up with the growing use of data on their networks. Citing those difficulties, it and other carriers in the past couple of years have discontinued their unlimited data plans.

That was unfortunate for consumers; this is even worse.

Doubling the cost of data is both outrageous and unwise. Data-hungry smartphones may be putting stresses on carriers’ networks, but they’ve also lured in many new customers and given the carriers a new stream of revenue from data sales to shore up their crumbling voice and messaging businesses. Jacking up prices so dramatically at a time when consumers are becoming increasingly dependent on wireless broadband smacks of profiteering. The rate increases are sure to make consumers closely monitor their usage, which will likely stifle innovation, decrease adoption and eventually cut into Verizon’s own revenue.

The rate increase on data might be defensible if Verizon were offering a corresponding cut in voice and data prices. But at least for those on lower-end plans, it’s not.

Verizon spokeswoman Heidi Flato noted that the new plans do offer consumers many more minutes and messages than previous plans and will offer a price break to some consumers.

“Nearly all customers will receive more value when they move to Share Everything Plans,” she said.

But all those additional minutes and messages likely won’t mean much to you. According to the wireless industry’s own figures, the average number of voice minutes that consumers use has been falling for years. And the number of messages that consumers send has started to drop as well. So Verizon’s new plans will effectively make many consumers pay as much or more for services that they already don’t use very much.

To be sure, the new Share Everything plans aren’t all bad. They certainly are easier to understand. Consumers who spend a lot of time talking on their wireless phones or send thousands of messages or who have many different wireless devices will likely see a price break.

Best of all, existing Verizon customers can keep their old plans, at least for now. That’s good, because many will likely be better off if they do.

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