4G and the End of 'All You Can Eat'?

Verizon has just changed/streamlined its pricing and plans. As a practical matter these changes will represent an increase for those on the lower end of pricing but a real cut in pricing for those on the higher end. Verizon's unlimited calling plan (w/o text or Internet) is now $69.99.

These plans undercut Verizon's chief rival AT&T. That may cause AT&T to respond by similarly cutting prices (which it has this afternoon).

This sort of aggressive pricing is somewhat at odds with where carriers want to take the market. Indeed, Verizon is planning for a time when it switches from flat-rates to usage-based pricing. Verizon CTO Dick Lynch recently was quoted by the Washington Post

The nation’s largest wireless service operator thinks the days of flat-rate plans may be over, according to Verizon chief technology officer Dick Lynch in an interview Thursday at the Consumer Electronics Show. Instead, the company will probably charge a base rate for its users and allow multiple authenticated devices to be attached to its network. Then it will charge by how much bandwidth is used by a provider – a business model known as usage-based pricing.

“The problem we have today with flat-based usage is that you are trying to encourage customers to be efficient in use and applications but you are getting some people who are bandwidth hogs using gigabytes a month and they are paying something like megabytes a month,” Lynch said. “That isn’t long-term sustainable. Why should customers using an average amount of bandwidth be subsidizing bandwidth hogs?”

The strain placed on the AT&T and O2 networks from the iPhone is well documented. AT&T made lots of silly and self-destructive remarks last quarter in public about getting heavy data users to voluntarily cut back even though they had unlimited plans. 

As Lynch's comments indicate the carriers very much want to do away with flat-rate pricing. As a matter of competitive reality that may be challenging. Sprint and T-Mobile are likely to continue to use it to lure customers -- or lure them from Verizon/AT&T of the two larger carriers change their pricing structures.

The shift to 4G, however, will provide an "opening" and opportunity for carriers to introduce new pricing schemes and get away from "all you can eat." We'll see if the market allows it.