AT&T and Verizon to Offer Family Data Plans
Both AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ) are planning to offer a shared-data pricing plan later this year. The new plan would permit customers to purchase “buckets” of Internet data that can be shared among phones, tablets, and any wireless device that would ultimately provide a more affordable option to families and businesses.
But who will be the first to offer the new plan? The problem lies in the fact that $63 billion is ultimately at stake, both from increasing the number of users who have data plans and from reducing customer turnovers. There is also the added risk of losing money from customers currently willing to pay for individual data plans and the plan may also drastically increase costs and network traffic.
It is absolutely critical that Verizon or AT&T go about this the right way, which is essentially why both companies have been extremely indecisive about whether or not to be the first of the two to take the big leap. Providing a seemingly more affordable data plan, however, would potentially benefit service providers in substantially increasing the number of users purchasing data plans and in causing customers to have a greater dependence on their data plans. What does this plan mean for the iPhone? Apple's success under the family data plan depends on how carriers will be subsidizing the devices under the plan. As of right now, major carriers such as Verizon and AT&T pay for about two thirds of the cost of the iPhone. With the family data plan, however, it is questionable whether AT&T and Verizon can afford to subsidize the iPhones at the same rate, meaning carriers might have to raise the price for customers.
Other smartphones might have more success if major carriers begin cutting subsidies for smartphones. Android devices, which have proven to be more profitable for both carriers and retailers, might gain a stronger foothold if things don't go Apple's way.
Meanwhile, the Nokia Lumia 900 has become a huge source for debate after a remarkable incident involving a die-hard Apple fanboy sending Steve Ballmer a letter commending him for producing such an extraordinary Windows phone. Microsoft has unsurprisingly published the contents of the letter to its website. The Lumia 900 runs on Windows 7.5 Mango and, if it really has the power to convert even the most ardent Apple fans, might show promise under the new family plan.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.