aaron c beals

I fully recognize that my last three real posts were also rants. You’ll have to pardon me as I descend into “cantankerous old man” mode. Perhaps it comes from having two kids and looking with a critical eye at the world into which I’ve brought them. Who knows.

In case you missed it, Verizon Wireless just rolled out a new pricing plan that no one asked for. [1] Wait, we all get unlimited minutes and texts?!? 2003 me is very excited.

Yes, everyone gets unlimited minutes and texts, and then you pay a per-month fee for the data you use. The data is shared across all your devices (hence the “Shared Everything” moniker), and they’re going to allow hotspots again, both of which are nice touches. [2]

Essentially, they’ve switched from their former money-makers (voice, text) to their new one: data. They’ve made it easier for you to add extra devices (tablets, laptops) to your plan and share the data across your family. I’m sure with all those extra devices, you’ll be able to keep your data usage under 2GB, right?

The catches:

• Each extra device will cost you $10-$40/month to add to your plan, but with no increase in bandwidth (today, you have to pay $30/device/month but get get 2GB in bandwidth for that device). In the new pricing scheme, devices and data are decoupled.
• The devices that are more likely to rip through bandwidth (tablets, laptops) cost you less per month than the lower-bandwidth devices (feature phones, smartphones).
• Exceeding your cap will cost you $15/GB.
• Afraid your kids will blow through your cap watching HD Youtube videos? No problem, you can rate-limit them… to the tune of $4.99. Per month. Per device.

Luckily, if you’re one of the unlimited-bandwidth customers (like me) who was promised that you’d be grandfathered along forever, you can stay where you are and don’t have to switch to one of these plans. You just can’t get subsidized phones anymore, so a new iPhone or Droid will cost $650 instead of $199.

Back to the new plans, though. This is somehow supposed to be better for customers? This line from a rather comprehensive article in the Wall Street Journal indicates that the opposite is true (my comments in brackets):

“They [the carriers] all seem to be focused on the same objective—not beating each other up [cost-lowering through competition] but extracting value from their existing base [charging customers more for the same thing].” [3]

Hm, that sounds familiar. I think there’s a word for that. [4]

Look, my issue isn’t with Verizon trying to make money. I love capitalism. But therein lies the rub — I believe that the primary purpose of capitalism is to reward those who create new value. Competition is an important part of the value-creation process, because it ensures that the best ideas (read: those with the highest value) thrive, and over time, costs are driven down for goods that no longer provide as much new value.

Let me boil my complaints down to the top 3 problems I have with this move by VZW:

1. It doesn’t add any value. That bears repeating: It doesn’t add any value. They are charging more money for exactly the same product.
2. It’s a thinly-veiled money grab. The only quote from a Verizon employee referencing benefits for the consumer was “I really look at it as simplifying the voice tiers and giving customers less things to have to choose from…” [3] Seriously? We all know you’re finding ways to make more money with the same customer base. Make me work harder to find that out. To paraphrase Lewis Black: “you’ve got to manipulate me better.”
3. It’s the opening move of an anti-competitive, anti-consumer shift by the entire US wireless industry. We have a set of entrenched phone companies refusing to admit that the infrastructure they built is decades behind what the rest of the world has — and they have an innovation-stifling group monopoly on the market. This move by Verizon is actually the first indication of the telcos realizing they’re nothing more than dumb data pipes, and they’re getting the business model wrong!

My lovely wife has had to listen to me rant about this for the last hour, and stated “wow, you’re really fired up about this, aren’t you?”

Damn straight I am.

References:
[1] http://solutions.vzwshop.com/shareeverything/
[2] http://solutions.vzwshop.com/shareeverything/pdf/verizon_share_everything_plan_details.pdf
[3] http://online.wsj.com/article/SB10001424052702303901504577462241394886300.html
[4] http://en.wikipedia.org/wiki/Collusion