In March, Verizon announced an unlimited data plan for smartphones and other devices. Almost a month later, pundits suspect a “capacity war” might result as the major wireless carriers add data capacity.
Wireless Week has noted analyst concerns before, indicating the shift might be a net negative for revenue across the industry since customer spending will be divorced from usage. MoffettNathanson pointed out the move might target Sprint specifically, since it highlights Sprint’s “under-spending on their network.”
On Monday, Craig Moffett of MoffettNathanson said via Fortune that the plan is a sign of Verizon’s confidence in its ability to dominate the industry when it comes to capacity. The unlimited plan supports high-definition video, a strong draw when video is the fastest-growing usage type over all mobile networks.
T-Mobile and Sprint have also committed to including HD video streaming in their plans for no additional charge.
At the same time, a report from Recon Analytics’ Roger Entner via Bloomberg suggests that the unlimited offer might hurt carriers in the long run.
Congesting Verizon’s already crowded airwaves could slow down the network, Recon Analytics predicted, risking a backlash from customers who gain an unlimited plan but ultimately lose faith in the reliability of the service.
Verizon has the smallest amount of bandwidth among the big four carriers, but services the most customers: 114 million people rely on it. Verizon has upgraded its network capacity to prepare for the increased traffic by combining multiple radio frequencies into one high-traffic path. However, the company’s spending in terms of capital expenditures per subscriber is about the same as that of its competitors. It remains to be seen whether the higher traffic will help or harm.
Filed Under: Carriers
