Verizon (VZ 1.61%) has rolled out a new pricing scheme for its wireless data plans and T-Mobile (TMUS 2.22%) CEO John Legere, unsurprisingly, took to Twitter (TWTR +0.00%) to bash the company.
On the surface, the new Verizon plans actually look a lot like T-Mobile's. They offer roll-over data, protection from overage charges, and unlimited talk and text from the U.S. to Mexico and Canada. The problem -- and Legere seems to delight in pointing this out -- is that the plans are sort of like T-Mobile's but most of the new offers have catches, or cost extra.
"And OMG, my favorite part is that @verizon is going to charge you $5, to promise not to charge you for overages?! #SafetyMode #questionmark," the CEO wrote in a tweet, explaining that his rival wasn't making no overages part of its basic offering like his company does.
Legere also explained his answer to his own questions in another tweet.
"@verizon, why not just eliminate overages?! Oh, that's right... because you are greedy bullies! I think we need to have a little fun w/ this... ," the outspoken CEO tweeted. He then hosted a caption contest in his Twitter feed for a cartoon of "Verizon" (drawn as a playground bully) shaking down a "customer" (drawn as a smaller boy).
Legere has been a crusader against overages, which he has noted bring Verizon and AT&T billions of dollars each year -- much more, he has repeatedly said, when you consider that many people buy more than they need due to fear of running up bills for using more data than they paid for. T-Mobiles does not charge overages at all; it slows customers' access speeds down when they exceed their allotted data.
Legere, an outspoken critic of Verizon, is seen during the New York City Pride March in June. Image source: T-Mobile.
What is Verizon doing?
In addition to offering T-Mobile-like perks that are not quite as generous, the big-two carrier has raised its prices while offering customers more data. Its new plans, which are being sized like clothes, are as follows:
Image source: Verizon.
That's $5 more for small but double the data, $5 more for medium with one extra GB of data, $10 more for 2GB more with a large plan, $10 extra for 4GB extra on an XL plan, and the same $10 for 6 more GBs for XXL users. The three smallest plans have to pay $5 a month extra for unlimited calling to Mexico and Canada as well as $2 a day for unlimited talk, text, and data while visiting those countries. In addition, the three smaller plans pay $5 extra for "Safety Mode," which prevents the user from incurring overages while XL and XXL subscribers get that included.
Nancy Clark, senior vice president of marketing and operations at Verizon, shared the company's spin on its new offerings in a press release.
"The new Verizon Plan puts your mobile experience in the palm of your hand with the My Verizon app, giving you greater value with new capabilities that get rid of the fear of overages, offer bill simplicity, and help you better manage your overall mobile experience with a few quick taps," she said.
Is this just more of the same?
Verizon wants to have its cake and eat it, too. As Legere pointed out, the company wants to look like it's giving up overages without actually giving them up. Under its new plan it can either milk an extra $5 out of users or push people into buying more data than they use in order to not have to worry about pushing their bill higher.
"@verizon creates pain points, then charges more to solve the pain points created. Where have I heard this business model before? #Sopranos," Legere wrote on Twitter.
The T-Mobile CEO has a point. There are consumers who will benefit from Verizon's plans -- the ones who actually use a ton of data -- but overall this is a price increase, with new fees, being packaged as a consumer-friendly offer. It also shows that even though Verizon has shown solid results in recent quarters, the company does feel the pressure from T-Mobile.
It's hard to see how these new offers will entice any customers who have already left for T-Mobile, but it might prevent more from leaving. That's a small win for Verizon shareholders, but it seems likely that at some point, maybe soon, the company will have to give up overages, which will be a massive revenue hit it can't replace with fees.
