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

from the tomato,-tomahto dept

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.

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