Adaiah blog

Verizon Offers Prepaid Data Plans on Top Phones

In what could be the first phase of a transformation in the way its smartphone users pay for Internet use, the nation's biggest carrier, Verizon Wireless, has introduced prepaid data plans. The no-contract plans, which go into effect Sept. 28, offer unlimited 3G access on select handsets for $30 per month, or $10 per month for 25 megabytes, with a 20-cent charge for each additional megabyte.

Verizon customers can sign up for the plans immediately at Verizon stores or online. Verizon already offered prepaid service for many voice plans.

'Robust Device Portfolio'

"These new data offerings will help our prepaid customers experience the full breadth of Verizon Wireless' robust device portfolio and the many engaging, informative and helpful applications that depend on a data plan," said Jim Sullivan, director of marketing for Verizon. "Our prepaid customers will now have the freedom to enjoy all of the capabilities that these phones have to offer, while controlling costs and without being tied to a contract."

The plans are likely intended to increase the appeal of some of Verizon's top-shelf handsets. They are available on a range of models, including the BlackBerry Curve, the Palm Pre and Pixi, all five models of the top-selling Droid (made by Motorola or HTC), the Motorola Devour and LG Ally, as well as multimedia phones such as LG's enV TOUCH and enV3, LG's Chocolate Touch and VX8360, Samsung's Alias 2 and Renown, Nokia's Twist, and Casio's EXILIM.

Prepaid is an emerging sector of the wireless industry, with Sprint Nextel now offering a $25 monthly prepaid calling plan and T-Mobile offering a $50 plan for unlimited voice and text. Clearwire and Virgin Mobile are also expected to roll out prepaid plans.

Sliding Toward Tiered Prices?

While Verizon appears to be the first out of the gate with prepaid data, the cost is no cheaper than the average cost of a monthly data plan under contract. However, the $10 plan, with additional cost for overage, seems to be a step toward pay-as-you-go data usage.

In June, Verizon Chief Financial Officer John Killian told Business Week that as more smartphones access the Internet via Verizon's network, "We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate."

AT&T did away with its flat rate for data in June when it introduced Apple's iPhone 4. It now offers a $25 plan for two gigabytes of data per month, with additional gigs at $10 each, and a $15 200-megabyte deal with $15 for 200 additional megabytes.

"All wireless operators realize they have constrained resources and in the future will need to move toward measured or metered pricing," said wireless industry analyst Gerry Purdy of MobilTrax."I think Verizon is taking the first step before they make the big announcement [on tiered pricing]. The others will follow suit."

A July study by the wireless-rate-analysis firm Validas found that Verizon customers are the nation's most data hungry, with non-BlackBerry users consuming an average of 421 megabytes per month, compared to 338 megabytes by Apple iPhone users.