Verizon Wireless Unites America's Choice Plans with Unlimited Messaging

| April 16, 2007 | Wireless Services - U.S. | Competitive Intelligence Report

| Analysts: William Ho, Matthew Kunkle

Current Perspective: Very Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

On April 16th Verizon Wireless launched bundled voice and messaging plans called “America’s Choice Select.” The new plans will package unlimited text, instant, and picture/video messaging into the current America’s Choice plans, essentially at a $20 premium for individual plans and a $30 premium for family plans. For family plans, any additional line will also be eligible for unlimited messaging (up to five lines).

Analytical Summary

• Current Perspective: Very positive on Verizon Wireless, because by offering plan bundles that include unlimited messaging, the carrier is acknowledging and addressing a trend that messaging is rapidly becoming a necessity to differentiate service. Instead of treating unlimited messaging as a traditional add-on feature where customers may modify or cancel without resetting the contract, a plan bundle commits subscribers to keep the messaging feature through a defined period of one or two years. Furthermore, this monthly data revenue component is stable and predictable without the worry of customer fickleness.

• Vendor Importance: Very high to Verizon Wireless, because these America's Choice Select plans give the carrier a way to increase overall ARPU beyond the stagnant $50 mark, in addition to driving data ARPU beyond $8. Moreover, its flat-rate family messaging component could be marketed as consumer-friendly, following other consumer-friendly efforts such as prorated early termination fees and the 30-day test drive program.

• Market Impact: Very high on the wireless services market, because Verizon Wireless has upped the ante on its competitors and trumps many of the previous moves made this year. The industry realizes that as voice revenue declines or flattens, data is the prime driver to boost overall ARPU and future revenue. T-Mobile already has unlimited individual and family messaging as an add-on, but others do not. With the introduction of the new plan portfolio, other competitors will likely need to respond.

Recommended Competitor Actions

• To stimulate MyCircle further, Alltel should consider including unlimited MyCircle messaging with the purchase of any Axcess Messaging pack. This has the potential to up-sell any subscribers at price points below $59.99 to adopt MyCircle plans. For landline numbers, Alltel should consider adding a text-to-landline feature similar to the one available at Sprint.

• AT&T should consider matching Verizon Wireless’ America’s Choice Select plans or develop a more innovative plan portfolio. At the least, it should offer an unlimited inter-carrier messaging add-on option. As it stands today, its messaging plans do not match up well against its archrival. Not having a quick response allows Verizon Wireless to distance AT&T in overall ARPU and data ARPU.

• Although Sprint offers separate unlimited text and picture messaging offerings, it should join with the other carriers to offer generic messaging. Sprint needs to bundle unlimited messaging as part of its $20 and $25 Power Vision data plans. This way, Sprint can up-sell its customers with text messaging plans by moving them to Power Vision plans and also engender loyalty from existing customers, ultimately helping to reduce churn.

• T-Mobile should consider adding unlimited messaging for each myFaves contact as a built-in feature. For landline numbers, T-Mobile should consider adding a text-to-landline feature similar to the one available at Sprint. This would show that myFaves plans are continually adjusted to the benefit of its customers and it would go far to engender loyalty from existing plan holders and attract new myFaves subscribers. Now, that Verizon Wireless has pegged unlimited messaging at $5 more than T-Mobile on individual plans and $10 more on family plans, T-Mobile should be noting that Verizon Wireless’ customers again pay much more in terms of anytime minutes or messaging.

Recommended End User / Customer Actions

• Existing Verizon Wireless messaging customers who are finding that they or their families are heavy messaging users should move to America’s Choice Select plans, because these plans provide value and peace of mind over the current messaging add-ons. However, they should be aware that moving to these new plans requires resetting the one or two-year contract commitment again.

• Customers who are looking for unlimited messaging as a key value feature have several carriers to consider. Amp’d Mobile offers this feature for $15 a month, as does T-Mobile’s individual messaging option. However, aside from Verizon Wireless, T-Mobile pioneered the flat-rate family messaging feature where one price covers up to five lines. To go even further, customers may consider Helio’s All-In membership plans, because they roll in voice, unlimited messaging, and Web access.

Top