Monday, September 10, 2012

Verizon's data sharing plans breed confusion, cost concerns

Shared data plans may be too early to market, as many consumers are scratching their heads over the plans' fees and most leading U.S. carriers' subscribers still prefer unlimited data, according to fresh research from Parks Associates.

"Verizon (NYSE:VZ) and AT&T (NYSE:T) are the carriers that are rolling out shared data plans. They run the risk of substantially increasing their churn rate at the same time that Sprint (NYSE:S) and T-Mobile are marketing their unlimited data plans, which are still the most popular data plans on market," said Jennifer Kent, Parks research analyst.

The research firm presented Verizon Wireless' Share Everything plan to a group of survey respondents by describing aspects of the plan such as the ability to share mobile data quotas among a variety of devices. The plan also offers unlimited voice calls and text messaging but charges a monthly fee for each device on the plan plus a set monthly fee for the total data quota shared among devices.

"The results are not particularly encouraging at the moment" for shared data plans, said Kent.

That is because 40 percent of mobile phone users surveyed would rather switch mobile carriers than be forced to use a shared data plan, while only 11 percent would switch providers in order to get a shared data plan. In addition, 38 percent of survey respondents said they would voluntarily adopt a shared data plan but not switch providers for it, while 10 percent would choose such a plan if doing so were the only way they could remain with their current provider.

Half of subscribers surveyed said they would not voluntarily adopt a shared data plan are chiefly concerned about cost and one-fifth said they do not understand the plan.

"On a positive note for Verizon, the shared data plan is most popular among Verizon subscribers. This indicates that the carrier's marketing and education efforts are improving receptivity to the plan among its user base. Because a large portion of those who would not choose the plan indicated they did not understand the pricing scheme, it is possible that overall receptivity would improve with consumer education," Kent told FierceBroadbandWireless.

Among respondents who would adopt a shared data plan, only a quarter of them thought such a plan would help decrease their spending. The prime reasons respondents were attracted to a shared data plan was that they thought it would help them simplify how they pay for their mobile service and provide flexibility in how they use their mobile devices, said Kent.

Receptiveness to shared data plans is higher among those with multiple devices, but one-third of broadband households with mobile phones service still do not own a smartphone or a tablet, and another 20 percent just owns a smartphone, she said. "So a large portion of the market, in other words, simply do not have a need to share mobile data across devices," said Kent.

All national carriers' subscribers still prefer unlimited data plans, even if they cost more per month. "Unlimited data plans are still the most popular among every carrier's subscriber base," said Kent.

While 31 percent of AT&T subscribers, 30 percent of Verizon subscribers and 35 percent of T-Mobile USA subscribers say they prefer unlimited data plans to all other options even if they cost more, a whopping 44 percent of Sprint Nextel subscribers selected that option, which likely reflects the fact that Sprint has made unlimited data for smartphones its prime market differentiator and, therefore, it has attracted customers most interested in that pricing option.

T-Mobile just introduced a new unlimited plan on Sept. 5. Parks research showed that T-Mobile subscribers show the greatest willingness among subscribers of the four national carriers to try alternative data plans, said Kent, noting about one-fifth of those users are willing to try pay-as-you-go plans or tiered data pricing.

Parks' gathered its data via an online survey of 2,500 U.S. respondents living in households with broadband Internet access. All respondents were 18 or over and had an equal or greater share in household decision making. The survey was fielded between July 10 and July 22.

From the article, "Verizon's data sharing plans breed confusion, cost concerns" by Tammy Parker.

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