Verizon Wireless "Unleashes" $50 Unlimited Plan Aimed at Value Segment

| Apr 28, 2011 | Consumer Services U.S.
| Analyst: Weston Henderek

Event Summary

April 26, 2011 -- Verizon Wireless has announced the launch of its new $50 “Unleashed” unlimited voice, messaging, and data prepaid offer in Southern California and Florida. The plan is available for purchase with the LG Accolade, LG Cosmos, or Pantech Caper feature phones. Customers must maintain a balance on their account equal to at least the amount of their monthly bill in order to keep the $50 monthly rate, or they will face charges of $0.25 per voice minute, $0.25 per text message, and $0.99 per day for unlimited data.

Quick Take

Analytical Summary

• Current Perspective: Positive on the launch of the new regional $50 “Unleashed” unlimited voice, messaging, and data prepaid plan by Verizon Wireless in Southern California and Florida, because the new plan is the most aggressive prepaid unlimited plan offered by the carrier to date. In the markets where it is offered, the plan will put additional pressure on value-oriented unlimited plans offered by the likes of Leap, MetroPCS, Virgin Mobile, and Boost. In addition, the plan significantly undercuts AT&T’s $75 GoPhone unlimited offer, which only includes 200 MB of data. However, given that the plan is only available with three basic feature phones, it will not threaten smartphone-specific offerings from its competitors. In addition, the plan could cannibalize ARPU among Verizon’s own prepaid base on its more expensive nationally available offerings, while at the same time potentially harming the carrier’s premium brand image. This is likely why the carrier only rolled out the plan in select areas to test its overall effect.

• Vendor Importance: High to Verizon Wireless, since the carrier is looking for potential new avenues of growth in the prepaid sector as growth in its main postpaid segment begins to slow. Historically, Verizon Wireless has not been the most aggressive player in the prepaid space; instead, it has relyed on its premium brand image to justify premium prices. This new $50 “Unleashed” unlimited voice, messaging, and data plan changes the carrier’s strategy in select areas and is the most aggressive prepaid offering from the carrier to date.

• Market Impact: High on the wireless services market as a whole, because although there is nothing new about a $50 unlimited voice, messaging, and data plan in the prepaid space, this is the first time a major national carrier has released such an offering under its own brand. As a result, in the Southern California and Florida markets where the plan is available, prepaid competitors such as Leap, MetroPCS, Virgin Mobile, and Boost will face additional competitive pressure given the aggressive price point of the new plan coupled with the Verizon Wireless name. However, the overall effect will be somewhat blunted given that the offer is not available on a national basis and Verizon Wireless has not indicated if it is planning a national launch.

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Current Perspective

Competitive Strengths and Weaknesses

Response & Recommendations

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