Thursday, September 15, 2016

How much Data is Too Much Data?

Verizon Wireless made an announcement on July 23rd that any customers who were still on the unlimited data plans who use large amounts of data would have to switch their plans by August 31st or their lines would be disconnected. The customers who were using large amounts of data were using over 100GB of data per month for their wireless devices on an individual basis. In 2011, Verizon Wireless changed their plans, in which they stopped offering unlimited data plans to their customers and forced new customers to start paying for new data plans. The data plans were broken into different ranges of gigabytes (GB) offered to customers per month. Customers who were already currently with Verizon were “grandfathered-in” meaning that they would be able to keep utilizing unlimited data until they upgraded their phones or started a new contract with Verizon. I was one of the many customers who were grandfathered in but I used nowhere near 100 GB of data per month, in fact I was lucky enough to use close to 6GB of data per month. The large data plans offered to customers are intended for multiple users on one data plan in which the multiple devices would have to share the data.
I can understand why Verizon Wireless had made the switch from unlimited data to making its customers pay for data plans based on the amount of GB each person uses. It is just smart business practice with the ever-growing demand for data usage. What company wouldn’t want to make a profit on something that they were potentially making little or losing money on? Every day new customers are signing up with Verizon. Verizon was smart enough to see the potential profits and gain that were presented with the change. Managing excessive amounts of data per each individual customer can become costly and demanding. As our culture becomes more and more dependent on cellphones and wireless devices, so does our dependency on the reliability of data. The best way for the carrier companies to ensure this much like Verizon is to monitor and control the amount of data that is being used by individuals to guarantee there is enough for everyone without faultiness in quality coverage or signal loss. Customers will always try to take advantage of what they are able to. When Verizon was offering unlimited data, customers were using their phones as hotspots to run their computers. That alone requires a lot of data that Verizon was spending money on. I believe that the data companies have every right to charge what they want for data because they are the ones who have to manage and maintain all the data that their millions of customers use on a daily basis to ensure reliability. At the same time, I also believe that these companies are overcharging customers on the prices for that data. It seems like every time customers are eligible to renew their contracts or plans the cost of the new plans increase.

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4 comments:

  1. I thought this blog post by Dave was a great one. I am a Verizon Wireless customer and agree with Dave that Verizon charges too much for the price of data and even their prices for going over your monthly data limit. Data is in high demand in today’s world. It’s gotten to the point where to see someone without a smart phone is considered very weird. Everyone is using data, and some of the prices for data that cell phone companies charge is a little crazy. At the same time, because the data is in such high demand no matter what the cell phone companies charge, people will continue to pay for it.
    I was not aware of Verizon’s announcement on July 23rd about how they were getting rid of unlimited data plans. I think it’s an absolutely brilliant business move. As Dave said, people were using their phones as hot spots for their computers. I personally know 3 people who have unlimited data that are constantly allowing people to use their phones as hot spots. If someone is going over 100GB of data a month it is definitely not making Verizon any money. From a business stand point, it’s a brilliant decision. There is this absolutely huge demand for more data. As I said above, regardless of the price companies will set for their data, most likely people will pay. It’s gotten to that point in today’s world that data has become essential for everyday use for businesses and regular people. Side note: Going over 100GB of data in one month is absolutely outrageous. People need to put their phones down and enjoy talking to people and enjoy seeing life through their eyes and not through their phone screen.
    Verizon has every right to seek a way to make a profit from all of these data addicted customers. The demand is there, and is only going to increase. In coming years I would imagine the statistics say that the number of people going over 100GB/ month is just going to increase and increase. Imagine the cost of managing and storing 100GB/ month of data for just one individual. Now imagine if every single one of Verizon’s customers paid for an unlimited plan and each phone line used 100GB of data. I am not sure that any company out there right now has the capability to manage that ginormous amount of data. Five years ago the unlimited data plan probably made all the sense in the world because people were paying for using maybe 50GB of data but weren’t using that much so Verizon was able to make some money. But with the use of data per customer going up they had to make a change. Verizon has every right to make this change to their data plans; it’s their business model. Customers also have the right to ditch Verizon and find another carrier that makes more sense for them. That’s the beauty of America.

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  2. David's post is articulate and and cogent, and he has done an excellent job explaining Verizon's decision-making.

    When we talk about the proliferation of mobile broadband and data usage, it's easy to overthink JUST how much our mobile networks have developed within the past few (say, 5) years. Every new iPhone generation offers greater means of data usage (we were not FaceTiming over 4G LTE 5 years ago, for example), and with these new offerings means carriers must develop, maintain, and strengthen their networks for their customers.

    These developments and routine maintenance operations cost money, and carriers like Verizon need as much capital as possible to maintain their network vitality; losing cash to an antiquated business strategy is not in their best interest. Also, generally speaking, most people view their smartphone--and by extension, the data it uses--as indispensable. So, they are inelastic to price changes; people are still going to pay for the data they need/want to use without too much bickering.

    As much as mobile carriers like Verizon have increased their coverage to provide reliable access to their network (which, again, requires them to have optimal cash flows and levels of capital), its important to emphasize the increased presence of publically available Wi-Fi. Major cities have spent money to deploy strong wireless networks that allow all Wi-Fi enabled devices to connect, many times for free. While not totally public, I think of my use of the XFINITY Wi-Fi network that is available here in Baltimore to Comcast subscribers. My iPhone defaults to the network, and I have to admit that the performance of the network is surprisingly strong; I’m able to stream my Apple Music while driving all throughout the city. While I haven’t looked, I’d be curious to see just how much mobile data (that is, provided by AT&T) I actually use, since most of the time I am on XFINITY, and when I’m not, I’m probably connected to HoundNet or some other reliable network.

    My point is that high-speed wireless access as a whole as grown tremendously, and the “unlimited” plans of yesterday were not designed (financially, that is) to enable some people to use incredibly large amounts of data for a fixed rate. Verizon’s decision to eliminate “unlimited” plans is one that certainly benefits the company’s “wallet”, but I’d also add that it gives customers a chance to actually pay only for what they need, helping them in the long-run. Instead of paying a higher monthly fixed-rate to subsidize high-level users, people will be forced to evaluate their “wireless condition” and subscribe to the plan that best fits their needs and usage patterns.

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  3. Like David I found this article very interesting especially because in today’s world everyone is not only obsessed with their phones but they’ve become dependent on Wi-Fi and data. When I studied abroad in Singapore we often didn’t have data available, however my friends and I would travel lengths to find a café with Wi-Fi or would even pay extra to have data for the last few days of the month. Because having Internet and data readily available has become a norm, people are often willing to pay the price to be able to use the services that require data. Verizon customers who use over 100GB of data in a month definitely fit into the category of people who are dependent on their phones and Internet. If I was a customer of Verizon who was originally grandfathered into an unlimited plan I would be livid that Verizon would discontinue the unlimited data plans for customers who used over 100GB of data per month. Although Verizon said less than 1% of its customers still have unlimited data I feel that is it unfair to those customers to take a plan that they were grandfathered into away from them.

    However, as a corporation and a business I definitely think that Verizon is making the right move. As of right now Verizon charges $450 a month for 100GB per month, however this is meant to be shared by several users. In Verizon’s case if one user on the whole plan is using 100GB themselves they should definitely be required to pay for their own plan. This way if every user on the “grandfather plan” was using over 100GB Verizon would now make $1800, assuming there are 4 people in each plan, rather than just $450. Furthermore, I believe that cellphone and Internet providers didn’t realize the scope of how technology would change the world when they first introduced data on phones. The grandfather plans were definitely created when data was not used as frequently and was an incentive for consumers of Verizon to buy a bigger plan for just a little more. However now almost everyone has the need for data, it is no longer a luxury but rather a necessity especially for people who are working or still studying.

    I think that although customers of Verizon who use more than 100 GB will be disappointed that they will have to change their plan, many will opt to do so rather than disconnecting their lines. The fact that they are using so much data shows that there is a demand and need for it, and because of this companies can keep increasing the price of the service. Many of these high frequency data users will pay the price to use the service, or they will change to another provider who will most likely charge a similar price for the same service. As a consumer I am definitely disappointed that I will have to start paying more for my data plan, however for Verizon I know that this is the best business move they can make.

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  4. While I am not a Verizon customer, this article caught my eye right away. The idea that Verizon is forcing their customers to switch to a new plan, or else their line will be disconnected is a brilliant business tactic. In today’s world, the majority of people have smart phones—whether it is an iPhone, Galaxy, or Google device— with 24/7 access to the Internet. In an article I found from May 2016, wireless users used almost 10 trillion megabytes of data in 2015, which was more than double of what wireless subscribers used in 2014. That alone says enough about why Verizon’s business decision was such a great one.
    The switch from unlimited data plans to monthly data plans must have increased Verizon’s revenue drastically. As a customer of AT&T, if anyone on my plan were to go over the specified data for that month, AT&T automatically puts 1 GB extra on our account for $15 per GB. While I’m sure Verizon has a similar data plan in motion, it is evident that Verizon will make a significant amount of money off of their customer’s high demand for data per month.
    The high demand for data is what enables Verizon to pull off a business tactic like this. Nowadays, people from all different generations, use data to check social media sites like Facebook and Twitter, to access their e-mail, and even online banking. With that being said, it is clear that data is a necessity to most people; therefore, Verizon is able to make the switch from unlimited data plans to monthly plans without losing business, or money.

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