Verizon lost 398,000 wireless customers in the first six weeks of the year, though it reversed the trend by offering an unlimited plan. Photo: Eric Thayer/Getty Images
It’s now clear why Verizon suddenly decided to offer an unlimited plan in February. The company had no choice.
Verizon lost 398,000 wireless customers in the first half of its latest quarter, the company said in its earnings report this week. Once Verizon turned on its unlimited plan, the bleeding stopped. After the mid-February unlimited launch, Verizon managed to add 109,000 of its high-value subscribers -- a category the company refers to as “retail postpaid phone connections.”
“We introduced the unlimited offering primarily to protect our high-quality base,” Verizon’s CFO Matthew Ellis told investors during a conference call on Thursday.
Those customers have been attracted to the unlimited offerings at rival T-Mobile, Sprint, and AT&T, so Verizon realized it, too, had to play ball.
When it comes to pricing, the wireless carriers have been in a race to the bottom. That remains a positive for consumers. But, as corporate profits fall, shareholders are going to revolt.
Verizon shares are already down 11% this year and AT&T is down 6%. Investors have viewed upstart T-Mobile as a beneficiary of the pricing war; its shares are up 13% in 2017. At some point, the competition will likely weigh on its shares too.
LiveToThink on April 22nd, 2017 at 04:39 UTC »
Don't buy into this b.s. for a second. Verizon and this article are both completley full of it. Years ago, wireless carriers used to offer "unlimited 3G" plans without making it clear to customers that their supposed 3G connection would throttle down to 2G or less speeds after 3GB of data usage.
You may remember years ago, as the iphone rose to mass adoption, how people would talk about being "grandfathered in" to keeping the terms of their old unlimited plans. Throttling was the carriers' attempt to get out of those terms. Accused of bait-and-switch and locking customers into misleading contracts, AT&T was sued in 2011. They forced arbitration with the class action lawsuit, but the FTC and FCC went after them.
In 2016, the courts threw out the FTC's suit, but the matter was subject to be revisited based on the definition of a "common carrier" under net neutrality. Months later, T-Mobile's "unlimited" plan was the subject of a $48 million settlement based around failure to properly disclose restrictions to their "unlimited" (see: not unlimited at advertised speeds) plan.
That is why you have not seen these "unlimited" plans being offered by other carriers until a few months ago. They were waiting to see how the lawsuits played out. "Unlimited" is an advertising "holy grail", and now they know how far to go and what the legal precedents they can fall back on to inoculate themselves from pissed off litigious customers. Not to get political, but they knew they couldn't get away with screwing over and misleading customers with pro-consumer rights administrators at the FCC and FTC fighting them every step of the way. Guess what changed?
Look at the bottom of these ads to see the throttling disclaimer. THAT is the "CYA" lesson these giant corps learned. When the product you think you're paying less for isn't what you're actually getting, I don't consider that progress. And, I wouldn't certainly wouldn't label it as competition driving prices down. Personally, I'd rather not be lied to.
Capt0bvi0us on April 22nd, 2017 at 03:00 UTC »
As someone who travels internationally for work, I must say Google Fi still takes the cake for me.
NCGiant on April 22nd, 2017 at 02:49 UTC »
My unlimited Verizon throttles after 5gb to the point it's essentially unusable. They say it depends on network congestion but I've tested it at 3am and got .2 Mbps at best.