NEW YORK (Reuters) - Verizon Wireless is planning to force customers to give up their unlimited data plans when they move to its high-speed wireless service, a top executive for parent company Verizon Communications Inc said on Wednesday.
For now, Verizon Wireless customers who move to the company’s highest-speed fourth generation (4G) network from its older network can still use the company’s unlimited wireless data plan for a flat monthly fee.
But that will change after Verizon Wireless launches a new shared data plan offering this summer, according to Chief Financial Officer Fran Shammo.
“As they start to migrate they’ll have to come off unlimited and go to the shared data plan,” said Shammo who told analysts that he expects the shared plans would boost revenue for Verizon Wireless over time.
Under the new plan, customers will be able to share a monthly data allowance among different devices, unlike current offerings, where they have to sign up for a separate data plan for every device connected to the wireless operator’s network.
But because their data use will be metered under the new plans, customers monthly fees will increase as they increase their usage.
Shammo said he also expects the new offering to encourage customers to connect more of their devices to its network. As a result, he expects them to have to sign up for higher-tier data services that come with higher fees.
“We’re fairly confident we’ll start to see people uptick in the tiers, which is where we’ll see the revenue accretion.” Shammo said in a webcast of an investor conference.
The company declined to comment on when exactly it expects the policy changes to take place.
Once the shared plans are available, Shammo said he would change how he reports wireless revenue. Instead of reporting average revenue per user, Shammo said the company would start reporting average revenue per account.
One area where carriers like Verizon have been missing out is tablet computers as consumers have been hesitant to pay the extra cost of connecting their tablet to the cellular network. But Shammo said this may change with shared data plans.
Another sticking point is that operators like Verizon do not subsidize tablet computers. Shammo said this would not change any time soon.
“We’re holding pretty strong with the model of no subsidies on these devices,” the executive said.
The high price of devices such as the Apple Inc iPhone have hurt operator margins as Verizon and its rivals pay hefty subsidies for the device so it can offer the phones at a discount to customers who sign a two-year contract.
But Shammo said he is looking closely at moves by European operators to back off on subsidizing smartphones.
“I think the industry is going to look hard at these types of models going forward,” he said.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.
Reporting By Sinead Carew; Editing by Bernard Orr