Verizon Is Crashing Apple's Party
Sharing isn't caring.
This morning, Verizon (NYS: VZ) officially unveiled its Verizon Wireless plan for tethering as many wireless devices as possible into a single account, but it's not as great as it sounds.
Verizon's Share Everything plan may have seemed promising when Verizon was talking it up earlier this year, but it begins to fall apart when consumers begin working the math. Connecting up to 10 devices divvying up data that starts at $50 for a single gigabyte with pricing tiers all the way up to $100 for 10 gigs? Doesn't sound too bad at first.
However, Verizon is also tacking on monthly cover charges for every device diving into the bandwidth. Every smartphone on the plan costs $40, and old-school feature phones will set a customer back $30 apiece. Unlimited minutes and texting are included, but carriers know that data is where the tollbooths need to be installed these days.
If you want a tablet added to the plan, it'll be an extra $10 a month, while mobile hotspots, USB modems, netbooks, and notebooks will cost $20 each to be part of the monthly Share Everything plan.
Apple's not going to like this
Verizon is offering an online calculator to figure out whether the new plan makes sense for customers. Share Everything will make sense for some accounts, though customers on family plans will probably want to stick with that offering.
The ominous warning here -- and why Apple (NAS: AAPL) needs to start worrying -- comes toward the end of the Q&A:
"If keeping unlimited is important to you, you can choose to upgrade and pay full retail price for the phone."
In other words, those who have been grandfathered into unlimited data plans will have a rude awakening the next time they want to upgrade their phones. If unlimited data matters to them, they'll have to forgo the luxury of subsidized smartphones.
We're talking about hundreds of dollars upfront. Virgin Mobile will start offering unsubsidized iPhones in two weeks on prepaid access plans. The iPhone 4S at $650 is $450 more than the same device through one of the major carriers offering subsidized smartphones in exchange for two-year commitments.
Carriers pay much lower subsidies for Android devices, so anyone prizing the freedom of unlimited data on Verizon is going to be in for sticker shock when it's time to trade up.
Share and share alike
The spirit of sharing gobs of data was supposed to awaken the appetite for mobile-ready devices. Apple would be selling more of its pricier 4G iPads. The forgotten niche of mobile netbooks would be brought back to life. Customers who had been shocked over the size of their smartphone wireless bills to the point that they'd be reluctant to add portable connectivity would be encouraged to share data.
Well, reality never quite works out that way. Verizon -- and AT&T (NYS: T) , which has also talked up sharing data plans -- are in this business to make more money. If Share Everything plans would result in smaller bills for average customers, it never would've seen the light of day.
However, it just goes to show how out of touch Verizon is at this point. As smartphones penetrate deeper into the mainstream, connectivity is going to have to get cheaper.
There's a monster opportunity here waiting for Sprint Nextel (NAS: S) . It's the only one of the big three carriers still offering unlimited data on subsidized devices for new customers. It's also the company behind Virgin Mobile's gutsy iPhone push at retail pricing.
The problem with Sprint is that it's not profitable like Verizon and AT&T. Analysts don't see Sprint turning the corner for another two to three years, and who knows what the marketplace will look like at that point.
Maybe it's time to start clanging pans together and start up the old rumor that will Apple roll out its own wireless network to offer manageable access. Verizon is obviously only out for itself at this point -- and the same thing should go for Apple.
You say you want a revolution
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At the time this article was published The Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.