Verizon's LTE pricing: Good deal or gouge?

New 4G data plans hopes to keep heavy users in check

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Analysts widely agree that LTE smartphone users will likely pay for both an LTE data usage fee and a separate charge for voice service, 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 to discourage heavy usage, so the network will run efficiently for all users.

Verizon has bragged about the efficiency of its current network compared to that of No. 2 AT&T's network, which has been bashed repeatedly for problems supporting Apple's iPhone smartphone.

"If anybody plans to use LTE as a cable modem substitute, you will spend a lot of money," said analyst 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."

"They are encouraging light usage to encourage acceptable performance," Gold said.

Businesses will benefit

He said the LTE pricing might end up being a challenge for some individual consumers, but he added that LTE's benefits for businesses "are clear." Most business users will be fairly light users of LTE to access e-mail and download presentations, or even to access enterprise applications wirelessly, he said.

Verizon has said LTE could handle a download of a 10MB file in 10 seconds or so, instead of about 100 seconds with the current 3G network. That would be a clear advantage to many business users, Gold said.

Gold said that, to some extent, the announced pricing for LTE data won't matter to large enterprise customers, who will convince Verizon to sell them data plans that can be pooled across a large body of users, thereby lowering costs.

For the same $50, he said some companies will perhaps get 10GB or 15GB per user. "All things are negotiable," he said. "It's just an accepted premise that people want a faster network, just like with the move to 802.11n."

Ultimately, the value of LTE is that it gives Verizon a tremendous boost in network capacity for a larger number of users, Gold noted. If a user can download a large presentation in 10 seconds instead of 100 seconds, as Verizon has argued, "then that leaves them 90 seconds so they put more people on the network with that capacity," Gold said.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at  @matthamblen, or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Copyright © 2010 IDG Communications, Inc.

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