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Verizon Shoots Smartphone Owners With a Cap Gun

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We knew this day was coming, but it still stings.

FierceWireless is confirming that Verizon Wireless will stop offering unlimited data plans to new accounts starting tomorrow. Existing customers will be able to stay on, even if they upgrade their phones.

Verizon Wireless -- a joint venture between Verizon (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) -- now joins AT&T (NYSE: T  ) in creating a new generation of data sippers with tiered pricing plans.

Verizon CFO Fran Shammo apparently meant what he said during March's Morgan Stanley Technology, Media & Telecom Conference. Despite having finally landed Apple's (Nasdaq: AAPL  ) iPhone earlier this year, Shammo admitted that the pricing change would take place "in the mid-summer time frame."

It's early July. Prospective iPhone buyers should be holding off on buying an iPhone 4 when an updated model is likely out in two to three months. Why not quietly roll out the new policy in the lull of summer?

This is still a big mistake. I don't think that everyone has a right to treat wireless connectivity like a gluttonous smorgasbord, but the unlimited data plan did help Verizon Wireless stand out against AT&T. Now it will be just like its largest rival, with pricier tiers to boot.

Where does the line start to petition unlimited data holdout Sprint Nextel (NYSE: S  ) to become the third stateside carrier to hop on the iPhone bandwagon?

Verizon should make money here, while shaking off future data hogs. Grandfathering existing accounts -- a tactic that AT&T went with last year -- will help keep those on unlimited plans from fleeing to competing carriers. In other words, I concede that it's a smart move in the near term. However, this is also the kind of thinking that will send smartphone buyers to smaller carriers and away from the iPhone standard.

Another winner here should be Boingo Wireless (Nasdaq: WIFI  ) with its network of 325,000 mobile hot spots worldwide. Meter-watching smartphone owners will want to switch to faster Wi-Fi when they're not in motion so they don't eat into their data plan's megabytes.

The losers? Well, I'm one. You're probably one, too. Smartphone owners and usage in general come up lame in this move. Thanks for keeping our eyes on the meter -- and not on relishing the smartphone experience -- Verizon.

Are unlimited data plans history or will they make a fashionable comeback? Share your thoughts in the comment box below.

The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple, AT&T, and Vodafone Group, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz has unlimited distaste for limited data plans. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 06, 2011, at 12:31 PM, trader2223 wrote:

    Verizon is a joke....along with AT&T. I feel the clock rolling back to the early 80's with this duopoly throwing their weight around again!

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Rick Munarriz
TMFBreakerRick

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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