Verizon's LTE Pricing To Launch Dumb Pipe Era - InformationWeek

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Commentary
11/18/2010
10:24 AM
Eric Zeman
Eric Zeman
Commentary
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Verizon's LTE Pricing To Launch Dumb Pipe Era

By considering network speeds as well as data transfer amounts in wireless plan pricing, Verizon Wireless has finally admitted that its network is a dump pipe.

Five years ago, before the network operators' walled gardens came tumbling down, one of their primary fears was that their expensive networks would eventually become dumb pipes. Those gardens collapsed to a degree, but still the operators fought the dump pipe label with value-added services accompanying basic access.

With Long Term Evolution, WiMax and HSPA+ networks on tap to deliver wireless broadband speeds beyond 10Mbps, the network operators are toying with new ideas through which to monetize those networks. Verizon Wireless' latest scheme takes a turn to the dark side, if you ask me, and clearly demonstrates that LTE and other "4G" networks are in fact the dumb pipes the operators feared.

According to a report in the Wall Street Journal, Verizon is weighing how to price LTE services. One idea is to meter service based on data usage. For example, customers who want access to 1GB of data transfer per month would pay less than those looking for access to 5GB of data transfer. That idea has been on the table for a while and in fact AT&T and Verizon Wireless are already using this model for access to their respective 3G networks.

Verizon's CFO Fran Shammo told the Wall Street Journal that it is now also weighing different price points for different data speeds. Want a faster connection? You'll have to pay more.

"If you want to pay for less speed, you'll pay for less speed and consume more, or you can pay for high speed and consume less," said Shammo. Shammo didn't indicate if customers could have access to high speeds and large amounts of data transfer. (Probably not.) Shammo also didn't give any indication how the pricing for these different packages would map out. Will it be $25/month for 5Mbps and $50 for 10Mbps? The pricing could land anywhere.

The killer comment made by Shammo, however, is that because Verizon's LTE network can deliver speeds between 1Mbps and 12Mbps, Verizon has plenty of room to offer tiered pricing for speeds -- "similar to home wired Internet service."

At home, I use Verizon Communication's FiOS TV, phone and internet services. Verizon offers different broadband speed packages. I pay for a 50Mbps download / 25Mbps upload package. There are other options available.

Make no mistake. Pricing services this way is a frank admission that the network is nothing more than a tunnel through which customers bore for access to the content they want.

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