June 16, 2012

Another View: Wireless data pricing could cool economy

Only a few companies can act as gatekeepers to consumers who use smartphones.

Los Angeles Times

Verizon Wireless, the country's leading provider of mobile phone service, announced plans this week for a double-digit increase in the entry-level price for using a smartphone. The company defended the move, saying it should help subscribers with multiple wireless devices -- for example, a family with several smartphones and a tablet computer.

But the heart of the plan is higher charges for using Verizon's network to transmit data, which is what customers have increasingly been doing since the advent of Apple's iPhone. The announcement was a worrisome reminder that a handful of companies are potential gatekeepers to one of our economy's most vibrant sectors.

The new Verizon "Share Everything" plans represent a 180-degree shift from what the company had been offering only a year ago. Then, smartphone users paid $30 per month for unlimited data while choosing among various limits on calling minutes and texts. Starting later this month, new subscribers will pay $40 per smartphone for unlimited calling and texting, and $50 to $100 per month for 1GB to 10GB of data.

Old-school phone users who burn through their minutes will benefit from the change, as will incessant texters. But that group is a dwindling breed. The volume of data is growing rapidly, doubling year after year.

The surge in data has prompted three of the four carriers that dominate the mobile market -- Verizon, AT&T and T-Mobile -- to drop their unlimited data plans in favor of tiered pricing. From the carrier's perspective, it makes sense to charge heavy data users more. The problem with Verizon's new approach is that even a light user with a smartphone is being hit with a bigger bill. It's not just the ceiling that's going up in price, it's the floor, too.

The question for regulators is whether the entire industry follows Verizon's lead, creating a pricing structure that slams the brakes on growth and innovation in wireless technology by making consumers think twice about their data usage.

The onus is on Washington to make the airwaves available for a vigorously competitive wireless broadband market so that consumers, not carriers, control the pace of the mobile revolution.

 

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