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Verizon's Off-Contract LTE Offer

Verizon's Off-Contract LTE Offer

erizon Wireless' planned rates for LTE data usage are either too costly or a relative bargain, depending on who is offering an opinion.

The nation's largest carrier announced on Wednesday that it will start offering LTE service on Sunday in 38 cities with two new data pricing plans. They are either $50 a month for 5GB or $80 a month for 10GB, and $10 for each 1 GB over those amounts.

The first users Verizon's LTE service, primarily targeted at business customers, will need to buy new USB modems to use with laptops that sell for $99.99 after rebate and with a two-year service agreement. Verizon said also that it will offer the modems for $249.99 without any long-term service agreement and just a monthly data charge.

The least expensive monthly service plan is $10 less than the same 5GB of data costs with Verizon's existing 3G service on its EV-DO network, something that several analysts praised after the new service's announcement.

But some critics said on Thursday that Verizon is potentially gouging new customers - especially unwary consumers - with data plans that tend to lock them in and could result in costly overage costs.

New speed comes with a trap

One early tester of a Verizon LTE modem said he found he get 21Mbps over the device on the admittedly uncrowded network, which could result in using up an entire 5GB monthly allotment ($50) in just 32 minutes.

Verizon is only claiming downloads will be 5Mbps to 12Mbps, which could still eat up a 5GB allotment quickly for an uninformed user.

Dan Hays, a partner at the management consulting firm PRTM who has followed LTE proposed rollouts in other countries, said he's noted that the average monthly usage for TeliaSonera's new LTE service, which offers speeds of up to 100Mbps in Sweden, Norway and Finland, is about 15GB a month per user. At that rate of consumption, a Verizon customer on the higher data plan would pay $80 for 10GB a month, plus $50 for 5GB, for a total of $130 a month.

In another comparison, customers of Clearwire, which operates a WiMax network also used by Sprint Nextel, use about 7GB per month (at average speeds of 3Mbps to 6Mbps. At that rate, with Verizon's least expensive plan, with overage charges, a user would pay $70 a month. Clearwire charges $55 a month, with no limit.

Verizon spokesman Jeffrey Nelson defended the new LTE data pricing, saying LTE data users will get automatic text messages when they hit 50 per cent, 75 per cent, 90 per cent and 100 per cent of their monthly data plans. "No surprises, and plenty of time to right-size your usage," Nelson said by e-mail.

He said it was suprising that some observers initially praised Verizon for charging $10 less for 10MB on LTE versus the company's current EV-DO services, "while today there's a hot new conspiracy theory about duping people into using data without regard to cost."

Nelson added: "I gotta tell you, there is absolutely no future for Verizon in tricking customers into paying for things they don't understand or want."

LTE smartphone pricing

The Verizon spokesman refused to say how Verizon will charge for the voice service once LTE phones are made available in 2011. Currently, voice is a separate charge for a smartphone from the data cost, starting at $30 a month, depending on the plan.

Analysts widely agree that LTE smartphone users will likely pay for both the LTE data usage fee and the voice cost, since voice will run over Verizon's existing CDMA network until at least 2012.

Broadband killer?

Most analysts believe that the monthly LTE data pricing Verizon has planned is high enough with overage charges that Verizon will limit heavy users so that the network will run efficiently for all users.

Verizon has bragged about that network efficiency with its current network when compared with No. 2 AT&T, which has been bashed repeatedly for problems supporting iPhone smartphones.

"If anybody plans to use LTE as a cable modem substitute, you will spend a lot of money," said Jack Gold of J. Gold Associates. "That's not how Verizon is targeting LTE. They are purposely charging for LTE so users won't.. download BitTorrent movies, or the network would fall on its knees."

Analysts widely agree that LTE smartphone users will likely pay for both the LTE data usage fee and the voice cost, since voice will run over Verizon's existing CDMA network until at least 2012.

Broadband killer?

Most analysts believe that the monthly LTE data pricing Verizon has planned is high enough with overage charges that Verizon will limit heavy users so that the network will run efficiently for all users.

Verizon has bragged about that network efficiency with its current network when compared with No. 2 AT&T, which has been bashed repeatedly for problems supporting iPhone smartphones.

"If anybody plans to use LTE as a cable modem substitute, you will spend a lot of money," said Jack Gold of J. Gold Associates. "That's not how Verizon is targeting LTE. They are purposely charging for LTE so users won't,download BitTorrent movies, or the network would fall on its knees."


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