Smartphone Bills Then and Now, and the "Share Everything" Future
Alright, so you've read about Verizon's new Share Everything data plans today. You also may have read the inimitable Chris Ziegler's article about how the Share Everything plans intentionally miss the mark. I wanted to add a bit of context to the existing discussion and suggest that current and prospective smartphone customers should be just a little bit pissed. We might even consider demanding changes through the FTC or FCC.
If you don’t feel strongly on this subject, let me preach to the choir for a bit. Think about an average smartphone wireless plan. Roughly one year ago the minimum cost of a single line smartphone bill on AT&T, including voice, data, and text messaging, was $59.99/month before taxes. In June 2012, that price has ballooned to $79.99/month. Take a look:
AT&T Minimal Smartphone Plan Comparison
|Early 2011||$39.99 (450 min)||$15.00 (200 MB)||$5.00 (200 msgs)||$59.99|
|June 2012||$39.99 (450 min)||$20.00 (300 MB)||$20.00 (unlimited)||$79.99|
Now, you could nix the text messaging plan, but then you’ll be two-dimed to death if you even use a few text messages. They’re pure profit.
Sprint’s also at $79.99/month minimum for smartphones as of January 2011, thanks to a B.S. "Premium Data service add-on". That was $69.99 a while ago before they extended this $10.00 surcharge to all smartphones, even those without WiMax or LTE!
When the iPhone 4 launched on Verizon, this was the minimum smartphone plan (including data and text messaging, as above):
Verizon Minimal Smartphone Plan Comparison
|Early 2011||$39.99 (450 min)||$29.99 (unlimited)||$5.00 (250 msgs)||$74.98|
|June 2012||$39.99 (450 min)||$30.00 (2 GB)||$10.00 (100 msgs)||$79.99|
Now, Last year Verizon started offering a $20 300 MB data plan for a limited time alongside their $30 unlimited data plan, so at one time you could have gotten away with $64.98/month. You can no longer get that plan as a new customer, though.
You may notice that the number $79.99 comes up very often. I’m no conspiracy theorist, but it’s very easy to see that the big three carriers have identical minimum smartphone service costs.
Bottom line: carrier price competition is a gigantic ruse at this point.
This brings us to the Share Everything plans. Let’s gaze into the future for a moment. Imagine if these just-announced "shared" plans were for an individual line. It's not too farfetched to think these may become the only plans available on Verizon someday.
Verizon "Share Everything" Plan for an individual line
|Date||Voice & Text||Data||Total|
|Next Sunday, A.D.||$40 (Unlimited Shared Talk & Msgs)||$50 (1 GB)||$90.00|
So, $90.00 for an individual line smartphone plan could be in our future. By next year or earlier, Verizon might be crazy enough to try it.
Now, why is this happening?
Turns out one of the driving reasons behind carriers increasing service costs are phone hardware subsidies and increased network utilization:
Nomura’s McCormack said carriers feel the need to have the iPhone to maintain their market share. But to make money on the devices, he thinks they will have to raise rates or get tough with Apple on reducing the subsidy.
The latter is practically impossible. So carriers have been gradually hiking prices. [emphasis added] Over the past year, Sprint increased its smartphone rates by $10 a month, Verizon ended its unlimited data offering and New Every Two deal, and AT&T ended its unlimited plan and raised its prices by $5 a month.
Apple isn’t the only factor, of course. Carriers are also raising their rates to offset the cost of expanding their network capacity and upgrading to more efficient 4G technologies. [emphasis added] But that, too, is tied up with the iPhone boom: Smartphones are data hogs, and they’re one of the prime reasons carriers need to sink billions into improving their infrastructure.
In a nutshell, iPhones are popular, the hardware is expensive (for carriers), and people actually use their iPhones. A lot. It’s a tough situation.
What's the big picture?
The subversive overselling of voice/text services as the wireless world quickly moves to data-only is the name of the game right now. In my perfect world, we’d all complain to the FCC, the FCC would grow a pair, and require carriers to cut voice costs, cut text messaging costs, and decrease the cost per megabyte of data plans.
No way it’s that easy, but we’ve got to start somewhere—contacting the FCC might not be the worst idea right now.
tl;dr: Phone bills increased significantly in the last year, adding more services smartphone users don't need and oftentimes lower data bandwidth caps. It sucks.
Now what? Time will tell…