Verizon's LTE pricing may trigger 4G rate war

Verizon Wireless is undercutting its own 3G plans with pricing for the LTE network scheduled to go live on Sunday, possibly marking the beginning of a fight to capture high-speed wireless subscribers.

The LTE (Long-Term Evolution) network . It will run about 10 times as fast as Verizon's 3G network, according to the carrier. At launch, there will be just one device on sale for access to the network, a USB dongle from LG Electronics for US$99.99 after rebate with a two-year contract.

Data plans for the network will start at $50 per month, with a 5GB cap on downloads. That's $10 less per month than Verizon charges for 3G plans with dongles, and it matches the company's rate for 3G service on laptops and netbooks with built-in 3G modems.

Technically, LTE is a more economical technology for serving data to customers, because it makes more efficient use of radio spectrum than 3G does. But that's probably not what's behind Verizon's pricing, industry observers said.

"It appears to me that their pricing is aimed at getting as many subscribers as possible locked in, using their service, and into contracts before competitors can roll out their networks to match Verizon's growing footprint," said Dan Hays, a partner at management consulting company PRTM. The carrier also wants to shift as many subscribers as possible to a single network, Hays said, though the 3G infrastructure is expected to remain for several years.

Verizon already has at least two national competitors for fast mobile data services being advertised as "4G." Clearwire's WiMax network is in 68 markets, and T-Mobile USA has launched its next-generation network in more than 80 markets. Though designed primarily for mobile use, the LTE offerings may also compete with wired broadband in some areas, Hays said.