Verizon Communications Inc.(NYSE: VZ) reported that they would start selling the unlimited data plans on Monday, the first time it has offered such a service since 2011. Given the rising competition, the group is forced to take this decision. Verizon stock fell over 7% in the last four weeks (as of Feb 10th; Source: Google finance).
Verizon is offering an introductory plan that gives users unlimited data on their smartphone and tablet on the 4G LTE network in the country. With VZ, the users also get HD video streaming, Mobile Hotspot, calling and texting to Mexico and Canada and up to 500 MB/day of 4G LTE roaming in Mexico and Canada are included. This plan has come after competitor Sprint Corp introduced a new unlimited data plan of its own. T-Mobile and Sprint, both the competitors, have grown their user base with users who don’t want to worry about using more data than their plan allows.
Verizon Communications has come up with two options. The first one is $80 for unlimited data, talk and text on your smartphone with paper-free billing and AutoPay and the second one is $45 per line for four lines with unlimited data, talk and text on smartphones and tablets with paper-free billing and AutoPay. Moreover, VZ has added that after 22 GB of data usage on any one line and the company might prioritize usage behind other customers in the event of network congestion. VZ has added that it would maintain its existing data plans for those who didn’t want unlimited data. Additionally, as wireless networks have become better and able to handle more capacity, the unlimited data plans make sense. As well as, the cost of delivering a gigabyte of data had dropped 40% to 50% as its network had evolved.
Verizon Communications announcement is significant for the industry as the carriers have gradually made it costlier for subscribers to use unlimited data plans. The usage has increased as smartphones and tablets have become increasingly ubiquitous, as the users are moving away from consuming media and Web surfing on traditional computers. Furthermore, AT&T still offers the bottomless data, but has hiked the cost for grandfathered plans, making it increasingly costly for data junkies. AT&T will start in March, in which the subscribers will be using unlimited data plans, will pay $40 per month.
Meanwhile, 12 analysts have a consensus recommendation of a “Moderate Buy” while the stock has an average price target of $53.43, which is a further upside of 9.09%.