Shared Data Plans: Which Carrier Will Get There First?
Family shared-data plans were a hit when they were introduced in Canada by Rogers Communications Inc. (NYSE:RCI) in 2009. The plans allow a wireless customer to allocate a chunk of Internet data between various devices such as phones and tablets among the various subscribers on a shared plan.
“The number of people using data at Rogers just exploded,” said Reade Barber, a vice president at Rogers Communications Inc. “More than 25 percent of Rogers’ family-plan subscribers use shared data plans – we attracted a lot of new users of data.”
More than 60 percent of smartphone owners could be potential subscribers to shared plans, according to Strategy Analytics. According to Dan Hays, a consultant with PricewaterhouseCoopers LLP, “Data pooling is inevitable and makes all the sense in the world for the carriers. It creates an environment where people can use more devices without having to think about it.”
According to Chetan Sharma, an independent wireless analyst, attractively priced data sharing plans could boost the number of tablet consumers using cellular data connectivity from 10 to 12 percent, to as much as 50 percent.
Given these obvious advantages, what’s holding back the introduction of shared data plans in the U.S.?
It may be a simple case of who’s to bite the bullet. According to Sharma – with billions of dollars at risk, both Verizon (NYSE:VZ) and AT&T (NYSE:T) are weighing their options. Getting the plans right would lead to a higher subscriber base and reduce customer churn. On the other hand, risks loom that subscribers would consolidate billing to lower average levels while carriers would have to cope with higher capital expenditure and increased network operation costs.
Of the two leading carriers, Verizon may be out of the gates first with a shared data plan. “We are probably going to launch data share plans this summer,” Chief Financial Officer Fran Shammo said in an interview. “We think we will be the leader in this category. It will be a new innovative pricing plan for data. You can expect tiered pricing.”
AT&T has been less forthcoming on its plans – “We’ll have something later this year,” said Ralph de la Vega, president of the Dallas-based company’s mobility division, without elaborating.
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