After years of walking back from unlimited data plans, carriers are starting to reverse course. T-Mobile (NASDAQ: TMUS) launched its One unlimited plan last year, although there were a few caveats around mobile video optimization (you have to pay $15 extra for One Plus if you want full-resolution video). Just last month at CES, the Un-carrier effectively cut the price by absorbing all the taxes and fees, so customers pay the advertised price with no surprises.
Continue Reading Below
Verizon (NYSE: VZ) announced yesterday that it was resurrecting its own unlimited data plans, which it had previously discontinued way back in 2011 in favor of tiered rates, although many customers were grandfathered in. In November, Verizon jacked up the price for those remaining grandfathered unlimited plans by $20. The move represents a change of heart for Verizon, which said as recently as September that people "don’t need unlimited plans."
Image source: Getty Images.
It’s also worth noting that of all the U.S. carriers, Verizon has withstood competitive pressures from T-Mobile quite well over the past few years, often refusing to respond and maintaining relatively high pricing levels. But Verizon’s new offering is very much in response to T-Mobile’s momentum. Investors aren’t too happy about it.
More From Fool.com
- Motley Fool Founders Issue New Stock Buy Alert
- Forget GE! Heres how to play the largest growth opportunity in history
- Forget Apple! Heres a Better Stock to Buy
- He Made 21,078% Buying Amazon. Heres His New Pick
The Un-carrier vs. Big Red
Big Red’s new Verizon Unlimited plan starts at $80 for the first line, and the No. 1 domestic carrier was quick to point out that unlike T-Mobile, it won’t be throttling or downscaling mobile video. Another point of differentiation is that Verizon is still offering its shared data buckets, while T-Mobile no longer offers its Simple Choice plan for new customers as it aggressively pushes One. As with all unlimited plans, users with extremely high usage will get lower priority after a certain threshold to help with network congestion.
Continue Reading Below
ADVERTISEMENT
Here’s how the two plans stack up.
Feature
Verizon Unlimited
T-Mobile One
1 line
$80 per line
$70 per line
2 lines
$70 per line
$60 per line
3 lines
$54 per line
$47 per line
4 lines
$45 per line
$40 per line
Mobile video
HD video included
Downscaled to 480p unless One Plus is purchased
Reduced prioritization threshold
22 GB
28 GB
Tethering
10 GB at 4G LTE speeds
Throttled to 2G speeds unless One Plus is purchased
Taxes and fees
Not included
Included
Data sources: Verizon and T-Mobile.
Neither plan is definitively better; each has trade-offs. Never the shy one, T-Mobile CEO John Legere took the expected jabs on social media.
Thinking @verizon’s "unlimited" plan might be most expensive ever. And don’t forget to add the taxes & fees (+any fees not announced yet)!
John Legere (@JohnLegere) February 13, 2017
Overall, analysts are skeptical about the new plan. Rivals have largely closed the gap in terms of network performance, and the "soft cap" where speeds are reduced is lower than T-Mobile’s. The whole purpose of shifting toward tiered rates years ago was to better monetize increased usage, so pricing power is now weakened. Additionally, if the industry starts shifting back toward unlimited plans, a pricing war will inevitably break out, and only consumers win from pricing wars.
10 stocks we like better than Verizon Communications
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Verizon Communications wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017
Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
Our editors found this article on this site using Google and regenerated it for our readers.
