Verizon 'Competes' With T-Mobile By Raising Prices, Then Denying It's A Price Hike

from the tomato,-tomahto dept

Thu, Jul 7th 2016 6:32am — Karl Bode

For years T-Mobile has been making some welcome changes to U.S. wireless service, implementing everything from free data while roaming internationally, to rollover data plans that let you keep unused data. T-Mobile's strange, new tactic of treating consumers well has paid incredible dividends for the company, which has been adding significantly more postpaid wireless subscribers per quarter than any other major carrier. Between the elimination of consumer pain points and its foul-mouthed CEO, T-Mobile's been a welcome change for the sector (just ignore its attack on the EFF and failure to support net neutrality).

This is of course in stark contrast to Verizon Wireless, which has desperately been trying to avoid competing with T-Mobile on price, even proudly proclaiming that it's happy to kick "price sensitive" customers to the curb. The carrier's primary tactic has been to claim that the company offers such an incredible wireless experience," it doesn't need to compete on price. But as T-Mobile has gained ground and improved its own network, that tactic has started to falter.

So this week, Verizon Wireless unveiled a new attempt to try and 'compete' with T-Mobile, the primary focus being to raise already high prices another 17%:

"On Wednesday, Verizon overhauled its main offerings for monthly customers, increasing most data allowances by 33%, adding a rollover feature for unused data and cutting prices for using phones in Mexico and Canada. But it also raised its standard monthly charges on all the new plans by as much as 17%. For example, a 6 GB plan that cost $60 per month will be replaced by an 8 GB plan that costs $70.

So you'll get a bit more data, but you'll continue to pay a steep premium for it. Keep in mind that Verizon's wireless data prices were already some of the highest in the industry. Also realize that Verizon carefully analyzes customer usage patterns and designs their shared data plans to drive as many customers as possible to the more expensive plans. One of the biggest benefits of such shared data plans for carriers? Most consumers have no idea what a gigabyte even is. As such, they sign up for bigger, more expensive plans they likely don't need -- just to avoid the hassle of worrying about overage fees.

This being Verizon, the company was quick to claim that charging 17% more wasn't a price hike, clinging tightly to the narrative that it doesn't have to compete on price because it's just that awesome:

"But Verizon executives say that customers will pay for the increased data allowances and superior quality of their network. "Customers are using more and more data on our network,” Nancy Clark, senior vice president for marketing and operations, said in an interview with Fortune. “We needed to build bigger data plans and the value is better than ever.”..."This is in no way a price increase,” Clark added."

To try and counter the price hikes that aren't price hikes, Verizon made a number of other changes to the way its wireless plans work, including offering a new "safety mode" where users can avoid overage fees, but have their connections throttled back to 128 kbps (for an extra $5 a month). The carrier also unveiled a new rollover data option (which Verizon last year breathlessly declared it wouldn't follow T-Mobile on). But in very Verizon fashion, the company made a number of changes to the way rollover data is supposed to work in order to make it less useful for consumers:

"In addition to the price and allotment changes, Verizon's also following T-Mobile's lead in offering "Carryover Data," a rollover data plan that lets you forward unused data to the next month. But like AT&T's version Verizon has muted the benefit of the idea by forcing users to burn through their existing allotment before being able to touch your carried over data allotment -- and by making the data expire if you don't use it in a month."

In other words, Verizon Wireless' attempt to compete with T-Mobile involves raising prices and copying a bunch of ideas T-Mobile implemented years ago -- then somehow magically making them worse. Watching Verizon Wireless try and "compete" is much like watching a rhinoceros do the electric slide -- it's just too foreign a concept to ever really seem natural.

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Filed Under: competition, mobile, price hike
Companies: t-mobile, verizon

26 Comments

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K`Tetch (profile), 7 Jul 2016 @ 6:41am

Probably a good idea, I used to be a verizon customer (only coverage where I am) and I'm not any more. We're now a SelectTel customer, which means we're still using the verizon post-paid towers, but we're paying less than half.

They'd be in real trouble trying to compete on price with a company using their own towers at half the cost. They'd have to rely on things like their stores, and customer service.

AHA HAHAHAHAHAHHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHHAHAHA!
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- Anonymous Coward, 7 Jul 2016 @ 6:54am
  
  Re:
  We've thought about switching from Verizon a few times. Unfortunately, the only alternative in the area is Comcast :/
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  - PRMan (profile), 7 Jul 2016 @ 12:58pm
    
    Re: Re:
    I think you are misunderstanding the article. It's about cellphones, not fiber internet.
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- Anonymous Coward, 7 Jul 2016 @ 2:43pm
  
  Re:
  They win either way. Towers and radios are a fixed cost. It's the device subsidies and call centers that get expensive. By wholesaling to the MVNOs, they get reliable revenue while not having to deal directly with customers that are more price-sensitive or less credit-worthy, which cost more in store/CSR labor.
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  - Anonymous Coward, 11 Jul 2016 @ 12:59pm
    
    Re: Re:
    They do their utmost to not deal with customers even without MVNOs. Try dealing with them.
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TheResidentSkeptic (profile), 7 Jul 2016 @ 7:25am

How far we have come in only a century...
"we have this fee we might charge you - but you can avoid it by paying us $30/month".

"your business might burn down - but you can avoid it by paying us $30/month"

Guess they did learn from history.
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5upMushroom, 7 Jul 2016 @ 7:27am

I switched to T-Mobile's semi-secret 30 dollar per month "pre-paid" plan a few years ago. Unlimited data, unlimited texts and 100 minutes (VOIP FTW).

Why would I switch to Verizon and pay, literally, 3 times more. Their network could be 10 times faster and have full coverage around the planet and I couldn't justify paying nearly 100 dollars a month for it.
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- kallethen, 7 Jul 2016 @ 8:12am
  
  Re:
  I almost switched to that plan before. But I've been sticking with my pre-paid TracFone. Pay for only what I use, and usually that's just needing one of the smaller cards every 90 days since my usage is typically low.
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- PRMan (profile), 7 Jul 2016 @ 1:00pm
  
  Re:
  I have a family plan. 4 lines for $100 a month with 2.5GB data and unlimited talk and text.
  
  We never hit the data because of Music Freedom and BingeOn. I believe it to be nearly impossible.
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Anonymous Coward, 7 Jul 2016 @ 7:34am

duh! cud someone educate me? if it costs Verizon absolutely nothing to increase the download amounts and the price goes up, how is it NOT a price increase?? i'd also like to know how Nancy Clark, who seems to have the brain of a rocking horse, mathematics wise, got her job? i know BS is said to baffle brains but i didn't realise it did so to this degree!
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- PaulT (profile), 7 Jul 2016 @ 7:45am
  
  Re:
  It's expanded upon slightly more in the linked article.
  
  Essentially, because the per-gigabyte charge is lower then it's not *really* a price increase even if you're forced to pay more per month. You're actually paying less because each GB is cheaper! Plus, they're going to allow existing customers to continue paying the original price if they want so isn't that a great customer choice!
  
  That's how management and marketing types tend to see things sadly, and they will continue to do so as long as enough people continue to fall for it.
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Anonymous Coward, 7 Jul 2016 @ 7:58am

Former Verizon Customer
I will say Verizon has good tower coverage. However my Verizon bill was excessively high and features I now have as standard were expensive extras. Forced updates to my Verizon phone ensured something on my phone was always broken (often calling and/or texting). Verizons support was terrible. With my new provider called Ting the phone bill with an additional phone on it is 1/3 of what it was and all the extras like hotspot and excellent customer service. Verizon wanted $30 per month per phone for hotspot. Really my biggest complaint now is a consumer hostile terms of use agreement, but that problem is industry wide.
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- Andy, 7 Jul 2016 @ 9:25am
  
  Re: Former Verizon Customer
  Remember that many agreements cannot or would not hold up in court, no agreement can rescind your legal rights, Many people think they can even some lawyers but no business entity can override the laws created by lawmakers, that is just not allowed. Just imagine them trying to say that you will not be charged with murder in an agreement if you murder one of there employees, the court will laugh them out of court or punish them for misleading the public into believing that a business agreement can change the laws we all live under.
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  - Anonymous Coward, 13 Jul 2016 @ 5:37am
    
    Re: Re: Former Verizon Customer
    Arbitration agreements have been upheld, waiving class action rights in these contracts has been upheld, and more. I'm not sure where you get this.
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- PRMan (profile), 7 Jul 2016 @ 1:01pm
  
  Re: Former Verizon Customer
  WiFi hotspots are free on TMobile if you don't overdo it.
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Wittle Hawwison, 7 Jul 2016 @ 8:41am

The other way of stopping
Clearly, the only way to stop this is to remove the top 20% of Vz upper management until the undesired behavior stops or they run out of management. This works with many corporations, especially the ones that manage to "lose" their playbooks. I have yet to see it implemented successfully, or, for that matter, unsuccessfully, above the third grade level.

The wesult at the thiwd gwade wevel was vewwy amusing.
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Ninja (profile), 7 Jul 2016 @ 9:01am

It's a capitalist wonder when a company can be that bad and stay afloat, isn't it?
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- Andy, 7 Jul 2016 @ 9:28am
  
  Re:
  It is sad but many do not know better they do not know there is real competition and are unable to push themselves to change what they have lived with for many years. Just look at those that are still on dial up where it costs more in some cases than dsl. The last i heard was there are still over 500 000 people paying for an aol dial up subscription.
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- Anonymous Coward, 7 Jul 2016 @ 12:02pm
  
  Re:
  Its not real capitalism because there are only so many frequencies allowed by the Govt. So it is a market with 4 competitors by design. That is not capitalism.
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Andy, 7 Jul 2016 @ 9:18am

Joke ...NO !
They are pricing themselves out of the market, and that is a good thing as they will end up having to lower prices much more than t-mobile just to keep the customers they have not yet lost, that will force t-mobile to lower prices and encourage more to move from Verizon and visa versa. Verizon is not interested yet as they are i suspect not losing the customers that are on contract but when people realise how much t-mobile costs and the reliability of there network they will eventually move.

This is going to be very good for competition.
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Anonymous Coward, 7 Jul 2016 @ 9:48am

I am currently on the Verizon $30/1GB data plan and as an FYI to even use these plans, you must fork over $20/month "Smartphone Access" fee. It is all a scam, calling to complain to Verizon only to find out that A) the fee is mandatory as there is no way to use the plan without a phone B) they'll happily reduce the charge to $10/month if you'd like to use the Verizon Edge program to pay monthly for the device as well.

-move to Google's Project Fi if you can
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Leslie, 7 Jul 2016 @ 1:38pm

Verizon v. Tmobile
I was a Verizon customer for far too many years. The absolute worst ever. Plus they crammed in fraudulent charges and then exclaimed they had no idea how that happened. But they were also unwilling to credit my account. I switched to Tmobile and couldn't be happier. Half the cost, excellent customer service and I have had dropped calls as I was led to believe. The coverage has been just like Verizon's.
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Kronomex, 7 Jul 2016 @ 4:32pm

In Australia this would be known as a Claytons price hike (https://en.wikipedia.org/wiki/Claytons) as in, "The price hike you are having when you're not having a price hike." Greed by any other name.
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Anonymous Coward, 7 Jul 2016 @ 7:05pm

Who needs a contract like that from Verizon, prepaid is where it's at!
Never have I been so glad to have the choice going with a prepaid cellular provider. On my current plan, I pay only $45 for more than 5gb. I literally can't imagine paying $70 for only 8gb, the mere act of trying to do so is terrifying.

So yeah, orange is the new black. Verizon's gonna be hemorrhaging customers real soon. And I'll be reading about it with a smile on my face.
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- Anonymous Coward, 8 Jul 2016 @ 7:34pm
  
  Re: Who needs a contract like that from Verizon, prepaid is where it's at!
  I doubt it. Most people are willing to pay Verizon; especially considering that their employees went on strike lately.
  
  When people go on strike, contracts are re-written. Most people don't mind paying a little more when they understand what it *actually* is that they're paying for. When Verizon employees went on strike, they were able to increase their salaries; wages, and standard of life.
  
  To compare, T-Mobile employees were also in Kansas ABCNews recently for desiring to join a union... In Kansas. If people aren't paid enough to stay around, there's likely not enough money to fix coverage problems either.
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Padpaw (profile), 8 Jul 2016 @ 4:58am

It's not rape, it's an act of love

I wonder if they will try that slogan next?
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