On Friday, Droid-Life reported that Verizon (NYSE:VZ) would soon be rolling out a new data plan called Verizon Max, specifically for existing customers that have unlimited data plans but would like to participate in Verizon Edge. You may remember that Verizon Edge is Big Red's "early upgrade" plan, but it specifically excluded legacy plans with unlimited data, unless those customers forfeited that feature. Verizon Max, I believe, is an acknowledgement that data is likely to become a critical new conflict in the smartphone wars, particularly as more and more activity moves to the small screen.
Under Verizon Max, which is expected to be officially announced on August 25, existing customers that have unlimited data plans will be able to opt for one of two options for a limited time. The lower tier will provide 6GB of data for $30 per month, while the higher-level plan will cost $50 per month and include 8GB and tethering capabilities. The duration of the availability has not been announced, but it demonstrates that Verizon understands that, as coverage improves from other carriers, data may become a critical point of differentiation.
The Verizon announcement comes just days after T-Mobile (NASDAQ:TMUS) announced that it was revamping its business plans to more closely resemble its retail options -- including the option for unlimited 4G data for $50 per month for business accounts. The company has been a first-mover in changing the structure of wireless plans this year, introducing contract-free pricing and JUMP, its early upgrade plan. The Simple Choice for Business plans are specifically expected to be a significant benefit for BYOD users in the business community.
The data conundrum
The fact that wireless carriers have begun to aggressively move away from unlimited data plans is a testament to shifts in the ways in which smartphones and tablets are used. As an increasing number of apps that provide streaming media are added to your device, the potential for large data usage rises. While it is important to remember that if you connect via a Wi-Fi connection, the data usage involved does not impact cellular data, but cellular usage versus Wi-Fi varies from user to user.
Between streaming video, streaming music, and video calls, the amount of data a user can hit can be quite significant, explaining why some -- myself included -- have been hesitant to switch plans, even with the potential of significant cost savings now. It seems safe to say that the biggest variable looking ahead is data usage. Just as some of remember when a 20 MB hard drive was "enormous," it is easy to see how 2 GB of data per month could quickly become woefully inadequate.
While the major wireless carriers will always jockey for position, looking to manage the needs of customers against the cost to the company, the introduction of Verizon Max is a positive acknowledgment by Big Red that data matters and that some users are willing to pay for it or leave. The introduction of Verizon Max is not likely to be a big catalyst for the stock, but it should help the company defend its customer base. All of the changes occurring in the wireless arena make the next several rounds of subscriber numbers important to watch to see how the various new options from each carrier are being received. I think Verizon Max is a positive, and adds to my overall opinion that the stock belongs in your portfolio.
Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.