Verizon Wireless introduced new wireless-pricing plans Friday that charge less for making calls but would require more customers to buy data plans, in a move aimed at taking business from AT&T
Inc. and boosting revenue from data services.
The carrier, which is jointly owned by Verizon Communications
Inc. and Vodafone Group
PLC, lowered the rates for its unlimited voice plan to $70 a month from $100. It also cut its baseline voice plan, which comes with 450 minutes, to $40. Unlimited text messaging costs $20 more for each.
At the same time, Verizon is pushing payment for data plans. Customers who buy a high-end smart phone, which can run applications and surf the Web, already have to pay $30 a month for an unlimited data plan. Now, a $10 plan for 25 megabytes will be required for those with slightly less advanced phones as well.
"It brings us into a reasonable competitive range with the numerous all-you-can-eat competitors out there," Verizon Wireless Chief Executive Lowell McAdam said in a call with investors. "We think the structure will drive higher penetration of data services."
Verizon, along with AT&T, has traditionally had the more expensive plans in the market. An unlimited plan on AT&T costs $100, plus $20 more for unlimited texting.
"We expect AT&T to follow quickly," Macquarie analyst Phil Cusick said, noting that in February 2008, when Verizon moved the plans to $99, AT&T followed suit a few hours later.
A spokesman for AT&T declined to comment.
A Sprint Nextel
Corp. spokeswoman said the carrier offers plans already that match up to Verizon's, including one that lets customers call any mobile number for free. She declined to comment on whether Sprint will react to the Verizon price cuts with some of its own.
A T-Mobile USA spokesman declined to comment.
Verizon will also streamline its phone lineup, cutting back from the roughly 80 phones it has on shelves to 50, Mr. McAdam said. While that could hurt some manufacturers, it will also clear up clutter and help Verizon Wireless's customer service operations focus better.
The carrier said that it expects the changes overall will boost revenue per user, as the lower rates keep more high-end customers from leaving and more money pours in from data services. Verizon Communications will announce 2009 earnings on Jan. 26.
Verizon has been on the warpath against rival AT&T, in a marketing blitz that compares Verizon's wireless coverage with AT&T's. Mr. McAdam referenced the "There's a Map For That" ad campaign in his comments Friday.
Mr. McAdam said that Verizon is "not in a position to worry" that ramping up use of data services could produce a similar overload on its network, which the carrier has invested in extensively for years.