Verizon Wireless Makes Flat-Rate Pricing Foray

Beginning in June, the nation's largest wireless carrier plans to offer unlimited wireless data service over its 1xRTT CDMA Express Network for $99.99 per month. The pricing is open to all business customers except those in certain verticals that require unusually large data transfers, such as telemetry applications and video Webcasting, the carrier said.

Verizon's pricing policy is significant because the high cost of data transfers is widely held to be one of the biggest stumbling blocks to adoption of the new, higher-speed wireless network services, which can offer data-transfer speeds close to those mobile workers are accustomed to getting from typical dial-up networks.

Solution providers and potential early adopters of the wireless data service have been lobbying for the change.

"It's what our customers have been asking for," said Denny Stigl, president and CEO of Verizon Wireless, addressing attendees last week at a Lehman Brothers wireless conference in New York.

Solution providers, many of which are just beginning to put together applications that utilize wireless data networks, said the new pricing makes mobile computing more palatable to potential customers.

A fixed-rate plan could be compelling to financially strapped companies when calculating return on investment, solution providers said. It can be difficult to project just how much data will be sent and received during a given month, and a fixed rate lets companies with large wireless data requirements get in the game for a flat fee, they said.

"It's all about ROI," said Craig Mathias, principal at the Farpoint Group, a mobile consultant and integrator based in Ashland, Mass. "The problem with open-ended pricing is companies aren't able to budget how much they are going to spend."

Larry Mittag, vice president and CTO at Stellcom, a San Diego-based mobile integrator, said the relatively high price tag of $99.99 per month is immaterial,at least at this stage.

"The real advantage is that it is a predictable ceiling, which will play very well with business applications," Mittag said. "The interesting thing is that once [businesses bite the bullet, then any new applications are essentially free."

Mittag said he believes Verizon Wireless has set a high bar to beat. "Now to compete, the other carriers will have to offer the same [service for $89.99, $79.99, etc.," he said.

How quickly competing carriers will adjust their own pricing models, however, is up for debate.

Although many industry experts believe the wireless data market will eventually move entirely to a flat-fee model in much the same way Internet pricing evolved, IDC wireless and mobile analyst Scott Ellison said it's still too early in the next-generation wireless-service life cycle to predict what will happen.

Verizon Wireless' rivals have priced their wireless data services just high enough to discourage large data transfers, perhaps for a reason, said Ellison. Most carriers are still building out their next-generation networks and believe it would be unwise at this point to stress the capacity, he said.

The move by Verizon Wireless underscores the carrier's confidence in its network capacity, Ellison said. "They are pretty confident of their 1x capacity level in major markets," he said.

Early word from some Verizon Wireless competitors indicates that similar pricing moves may not be on the short-term horizon.

AT&T Wireless, for example, has no immediate plans for flat-rate pricing, said Andre Dahn, president of the carrier's mobility-services subsidiary, during his own remarks at the Lehman Brothers conference. AT&T's market research shows that most business users will consume 20 Mbytes to 50 Mbytes of wireless data per month, he said.

"I would challenge why [users would want to pay for unlimited buckets at $100 when most business customers are going to fall way below that, and I can offer them more affordable solutions," Dahn said.

Meanwhile, Sprint PCS President Chuck Levine said at the same conference that his company will remain mum about pricing for its own 1xRTT next-generation service until its launch this summer.

"I will learn from my competitors, but I fear if I tell you [about Sprint's pricing plans, they will learn from me too," Levine said.