Verizon's LTE pricing may trigger 4G rate war

01.12.2010

Clearwire claims that average mobile users on its WiMax network, which is advertised at an average speed of 3M bps to 6M bps, consume more than 7GB per month. Under Verizon's cheapest plan, that would activate overage charges of $10 for each extra gigabyte, so the service would cost about $70 per month. For a comparable mobile plan, which shifts the user over to Sprint's 3G network when they leave the WiMax coverage area, Clearwire charges $55 per month with no cap.

If the idea of having no limits on downloads is appealing, however, that prospect may not last either, Gold believes.

"Everyone is going to have to go to a metered plan," Gold said. "Wireless is a commodity that gets used up."

Verizon had hinted that LTE would bring dramatically new pricing plans, but those were not in evidence with Wednesday's announcement. In addition to the $50 plan with a 5GB cap, there will be an $80 plan with a 10GB cap. Additional data use beyond those caps will cost $10 per gigabyte. Both devices that Verizon described during the announcement, both of which will be USB modems, are being offered with contracts. As with its 3G data plans, customers will be able to buy the LG modem for the full retail price of $249.99 and then pay the regular per-month rate without committing to a two-year contract, spokeswoman Brenda Raney said.

The initial LTE plans are similar to Verizon's existing offerings for mobile data, but neither Gold nor Hays was surprised that the carrier didn't make more significant changes. New methods of charging for mobile data, such as different plans based on the speed of the subscriber's link, would bring new challenges for network management, Gold said. "I don't think they want to go down that path," he said.