Verizon (NYSE:VZ) really does not want its customers receiving unlimited data.
The company already stopped selling the service to new subscribers way back in 2011. When it made that move, the company did allow existing subscribers to keep their plans, but it has been slowly turning the screws on these users to make them switch to one of the brand's tiered data plans.
Verizon has even announced plans to completely eliminate unlimited data in the past, but it has never actually enacted one. The company's CFO, Fran Shammo, said as much at the J.P. Morgan Technology Media and Telecom conference way back in 2012, CNET reported. "Everyone will be on data share," Shammo said. "When they migrate off 3G they will have to go to data share. That is beneficial to us."
That did not happen, but now the wireless carrier has decided to make another move designed to get customers to give up their unlimited data plans -- it's raising the cost by $20, according to CNNMoney.
What is Verizon doing?
Currently grandfathered customers with unlimited plans pay Verizon $29.99 per month for the data part of their plan. (They also pay additional fees for talk and text). The wireless carrier intends to increase that to $49.99 a month, it confirmed to CNNMoney.
The new price does come with a small upside for Verizon customers. Since unlimited plans were eliminated in 2011, the company had not allowed grandfathered customers to claim discounts when upgrading to a new phone. That will change with the higher prices, and "unlimited Verizon customers will once again be allowed to buy new phones at an upfront discount that customers pay over time," according to CNN Money.
This could backfire
AT&T (NYSE:T) does not offer new subscribers unlimited data, but Sprint (NYSE:S) does, and T-Mobile's (NASDAQ:TMUS) no-overage policy might also tempt angered Verizon customers looking to defect. Upping prices by $20 a month is not a small increase, and it might be enough to force longtime Verizon customers to check out Sprint and T-Mobile.
In the case of Sprint, the company offers an unlimited talk, text, and data plan for $60 a month. The No. 4 carrier also has some very attractive unlimited plans offering leased iPhones that cost $22 per month for the phone -- down to as low as $1 depending upon trade-in.
T-Mobile has a similar deal starting at $20 a month for a leased iPhone (with a generous buyout price after 18 months). It does not offer unlimited data plans, but it does not charge overages. Instead, the No. 3 carrier simply slows down network speeds when customers exceed their allotment. The Un-carrier also lets customers roll over unused data each month.
Verizon does have a better network than Sprint and T-Mobile, but its lead has rapidly shrunk, and in many parts of the country, network differences are not noticeable.
Verizon should just say no
It's very clear that Verizon wants to eliminate unlimited plans without actually doing so. It would be more honest and probably better received by its customers if it simply set an end date for grandfathered unlimited plans and called it a day.
Squeezing loyal customers by raising prices and making things uncomfortable for them seems like a mistake. Verizon is clearly trying to have its cake and eat it, too, and that generally doesn't work out.
Daniel Kline has no position in any stocks mentioned. He no longer has unlimited data. The Motley Fool recommends Verizon Communications. 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.