Verizon Will Trip AT&T With The iPhone — Then Point And Laugh With Unlimited Data

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Uh oh, AT&T.

It’s looking very, very, very, very likely that the event Verizon is holding on Tuesday morning in New York City is all about unveiling a CDMA iPhone that will work on the carrier’s network. And for those of us who have long suffered and struggled with AT&T’s network to be able to use the iPhone (particularly those of us in cities like San Francisco and New York) this is basically Christmas all over again. And in typical Apple fashion, there may be a nice little “one more thing” — but it likely comes compliment of Verizon.

Not only does Verizon seem poised to unveil an iPhone, it looks like they’ll do so with the option for unlimited data plans. This is something AT&T killed off last year, smartly disguising it as a better short-term deal for most customers. Of course, the reality is that the data caps are actually a long term play to help preserve their struggling network and more importantly, make more money.

But Verizon isn’t ready to go in that direction, apparently. At least, not yet.

Yesterday, Reuters cited an unnamed source says that Verizon will offer the iPhone to its customers with their existing wireless service plans. Today, the Wall Street Journal further clarified that the Verizon iPhone will in fact offer an unlimited data plan, citing “a person familiar with the matter”.

AppleInsider has a nice breakdown of what this actually means. While the core talk-time and text plans are largely the same on the two networks (though AT&T has rollover minutes), AT&T no longer offers unlimited data plans. Instead their highest data plan is 2 gigabytes for $25 a month. After those 2 gigs, each additional gig is $10. Verizon, meanwhile, if the plans do stay the same, will offer unlimited data for a flat $30 fee.

That’s the same unlimited data fee that AT&T used to offer until they castrated it in June. The timing of the move was curious as it was right before the iPhone 4 launched exclusively with AT&T in the U.S. In other words, they got millions of customers locked into the new plans for at least two years (though previous customers were allowed to keep their existing plans). Oh, and in another bit of curious timing, AT&T also managed to up their early termination fee right before all these new contracts were signed. Imagine that. That move couldn’t have been related to what’s about to happen on Tuesday, right? Sure…

And there’s more. Not only are the standard data rates much better on Verizon, but the tethering plan is better. Currently, AT&T gives you the option to use tethering on your iPhone, but it will cost you $45 a month (your $25 data plus an extra $20 to tether) and it counts against your same 2 GB cap. Verizon, meanwhile, offers tethering for $30 extra but they give you 5 GB of data to use exclusively for tethering with that money. In other words, it’s more expensive, but a much better deal because your AT&T 2 GB data cap will be eaten into quickly by your actual iPhone usage.

Assuming all of this information is accurate, this looks very, very bad for AT&T. It looks like the larger network that is perceived to be superior is not only taking their crown jewel, they’re kicking them in the nuts while they do it. It looks as if Verizon is confident that they’ll be able to handle the iPhone’s huge data traffic surge, whereas AT&T has already proven that they could not and altered their plans accordingly.

Let me pre-emptively include AT&T’s undoubtedly forthcoming spin here. Something like: “Customers are delighted by our data plans that are $5 cheaper than they previously were — and the data cap doesn’t matter because the vast majority of them never hit the 2 GB cap.” Let me then once again pre-emptively call bullshit on such a claim. Sure, most customers may not hit the 2 GB cap now, but everyone is continuing to use more and more data. As a result, more and more people will start to hit that wall in the coming months and years. And that means one thing for AT&T: more $ on overage charges.

Of course, the big picture is that Verizon is also still a greedy carrier. While their data plans may look good right now, they’re already said to be looking into the idea of capping them as well. And don’t be surprised if that happens sooner rather than later.

Still, for this initial iPhone launch at least, it’s looking like Verizon will be a big, red rose in bloom. As AT&T withers.

Update: AT&T has written to clarify that any customer with a previous contract can choose to keep it even after upgrading to a new device, so I’ve updated some of the wording there. The key point is intact: new customers don’t have the choice of getting an unlimited plan on AT&T, and they do on Verizon.

AT&T also wishes to point out that Verizon raised their ETF first. We still find the timing right before iPhone 4 launch suspicious.

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