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Verizon Lets the Sun Go Down on Unlimited Data

Verizon Lets the Sun Go Down on Unlimited Data

It may be the beginning of the end for unlimited mobile data. Verizon says it will soon all but eliminate the practice of allowing old customers to re-up their unlimited plans each time they get a new contract. Other carriers like AT&T may follow suit soon. Meanwhile, Google mulls Nexus, Microsoft keeps its APIs under wraps, and Yahoo once again plays the field for a new CEO.

By Paul Hartsock
05/19/12 5:00 AM PT

Wireless carriers have begun to realize that when you offer flat-rate, all-you-can-eat deals, it tends to bring out the pig in people. Whether it's food or beer or cellular data, customers will gorge themselves on it, and the buffet arrangement can quickly turn into a money-losing proposition if you don't plan it out just right. That's especially true when your customers have constant access to the resource you have on offer -- like mobile data through those cellphones they carry with them 24/7.

Originally, those unlimited data plans were introduced to attract users to these brand-new things called "smartphones." There weren't very many in circulation, networks weren't especially congested, and an extra US$30 per month on a subscriber's bill meant profit whether they used 1 gigabyte or 10.

Fast-forward a few years, and unlimited data users are carriers' most-hated customers. In fact, a couple of weeks ago, AT&T CEO Randall Stephenson said that his company should have never offered customers all-you-can-eat data plans in the first place. AT&T users, you have wronged this man. Please submit your apologies in writing no later than June 1.

Most carriers no longer offer unlimited plans to new customers, but they do let old customers continuously renew their unlimited plans each time they renew their contracts. Just because you grandfather in your old plan, though, don't expect smooth sailing. Some carriers will just choke down your connection speed once you use a certain amount of data. It's still unlimited, just extremely slow. Joke's on you.

That's why it was actually sort of refreshing in a way to hear what Verizon CFO Fran Shammo said at a JP Morgan conference this week. Instead of whining about unlimited users killing the network or thinking up some new loophole to annoy them into picking a new plan, Shammo said Verizon would soon nix the grandfather clause altogether. Users who want to upgrade to a new LTE smartphone would not be offered the option of importing an old unlimited plan for the new contract. It's also going to promote data-sharing plans that let families and other groups share mobile data.

Some users are going to be angry about it, other carriers will probably follow suit soon, and it's a bummer that the era of unlimited is probably behind us. But as long as current contracts are honored until they expire, nobody's being cheated. Verizon was never selling lifetime passes. It's simply going to offer a new set of conditions on new contracts -- take it or leave it. At least making a clean cut like this beats coming up with some ridiculous campaign of browbeating customers and needling them with technicalities.

However, it seemed Shammo's comments caught Verizon PR a little flat-footed. The company quickly issued a statement telling customers that it was only "evaluating its pricing structure" and that it'll share specific details of new plans well in advance -- just not now.

It did reveal one new tidbit, though: Unlimited plans aren't actually going away forever. Anyone with an unlimited plan can keep it when they get a new phone -- as long as they pay full price for the phone.


Listen to the podcast (13:02 minutes).

Pure Breed

Phone makers often try to come up with ways to get out from under the boot-on-neck relationship they have with wireless carriers. If a phone maker wants to access a carrier's retail channels and the price subsidies it offers buyers, it's going to have to make compromises -- that feature is going to have to go, this feature needs to change, and go ahead and pour in all these network-exclusive features of ours that interfere with the phone's original designs.

Unlocked phones and direct sales don't have to deal with that as much, but they typically have a very difficult time getting traction. Just ask Google. Two years ago, it tried to sell its first Nexus phone in a new way that basically cut carriers out of the loop. Sure, carriers were still needed to provide service, but they had no part in sales. The Nexus One was sold online directly from Google, its price and carrier availability were kind of confusing, and it turned out to be a real flop. The following Nexus phones were sold the old fashioned way, occasionally having a feature lopped off in the process.

Maybe the world just wasn't ready back in 2010. Maybe the plan can work now, with a few key tweaks and adjustments. That seems to be what Google's thinking as it reportedly musters new devices for a second attempt to up-end the carriocracy.

The new plan will also involve direct sales from Google to consumers, according to a report in The Wall Street Journal. And it will involve unlocked phones. But this time it will cover more than just a single Nexus -- it will include Nexus phones from multiple manufacturers. It will also involve Nexus tablets. And certain brick-and-mortar stores might get in on the mix too, so customers will actually be able to pick up and handle a new phone before buying it, if they insist.

Google and its hardware friends apparently plan to make Nexus phones their way, offer the features they want, and sell to buyers without indenturing them to two-year contracts. Its Nexus line could become the Android industry standard -- a pure family of Android products, as opposed to the bastards and mongrels tainted by carrier interference. Google would probably continue to allow carriers to offer mutated versions of Android all they want, but Nexus would remain on a pedestal. If it's managed well, the Nexus line could be Google's solution to fragmentation and an answer to the iPhone's squeaky-clean image.

If there's a hitch, it's got to be cost. The freedom of an unlocked phone comes with a price, and that price usually rings up to several hundred dollars. If there's no wireless provider to offer a subsidy, Nexus phones could end up being two to three times more expensive than carrier-approved phones, and Google could be in for a little deja vu.

Search Like a Person

Using search engines like Google sometimes requires you to change the way you think and communicate. When you talk with other people, you usually don't have to be 100 percent literal and explicit. It depends on who you're speaking with, but normally there's at least a tacit understanding and "you-know-what-I-mean" that goes on. Otherwise you'd sound like a robot.

Not so when you hit a search engine. You need to tell it exactly what you're looking for as explicitly as possible. It might help to use "+" signs and order your words in a certain way. You have to remember you're speaking to an algorithm that sorts words but doesn't understand them, and the top results it gives you will be the best mathematical match to the combination of alphanumeric characters you typed in, regardless of what those words and numbers really mean.

Google's trying to loosen that up by adjusting the math. It's added what it calls its "Knowledge Graph." It's compiled from data on half a billion people, places, things and historical events. Relationships are graphed out in a way intended to get down to what the searcher is really looking for, not just match a handful of characters and call it day. "Things, not strings" is how Google puts it.

For example, if you're searching for Frank Lloyd Wright, you're probably trying to find out about architecture, not whatever books he's written. A search for Isaac Asimov suggests an interest in sci-fi, rather than reforming the calendar or writing limericks.

The Knowledge Graph is a step in the direction of true semantic search, a way of searching the Web by understanding user intent and the contextual meaning of terms. As search becomes more semantic, it'll more closely resemble asking an actual person for help finding what you need -- except that person will happen to know just about every page on the Web.

What, Me Dominant?

As if Microsoft's extended absence from the tablet market hasn't been painful enough for the company, its entry into the market could put it on the wrong side of antitrust regulations.

So far, the tablet scene has been all about iPad, with a side dish of Android, and maybe a light dusting of PlayBook. Technically you can get something called a "tablet" that runs Windows, but it's not an OS built for the form factor, and the market share for those devices is virtually nil.

Microsoft hopes to change that with the arrival of Windows 8. Its upcoming OS lineup will include a version called "Windows 8 RT," which is designed specifically for devices using ARM chips -- in other words, mobile devices like tablets.

Windows 8 RT will still be Windows, but it'll be a very different breed. One difference that came to light recently has to do with browser choice: In Windows RT, you can only use Microsoft's own Internet Explorer. Microsoft isn't distributing APIs to other browser makers, according to Mozilla, the company that makes the Firefox Web browser. Google, maker of the Chrome browser, also registered its concern.

Microsoft's reluctance to share its application programming interfaces could run afoul of antitrust regulators. The company took an epic pounding from the DoJ about 15 years ago for abusing its market dominance and leveraging it to push Internet Explorer and hem out competitors. Similar complaints were more recently settled in Europe. It's left Microsoft and all its rivals very sensitive about how IE is handled. On the surface, hording APIs for an edition of Windows might seem like a clear violation of the rules Microsoft agreed to.

But that depends on what your definition of "market dominance" is. Microsoft's still an enormous player in software in general, and Windows is still the most widely used desktop OS in the world. But in tablets, Microsoft is practically nothing, and that won't change the moment Windows 8 rolls out the door. It faces a hard, long climb in that sector, and for now, an accusation of abusing market dominance is laughable, if you're talking about tablet dominance specifically. If in a few years Windows tablets gain a serious foothold and still ban rival browsers, that's going to be a different story.

So it remains to be seen just how much heat Microsoft will take for this. The U.S. Judiciary Committee is giving the issue a look, but actually making a case against Redmond over this could prove difficult in the U.S. Europe, though, can be a lot more sensitive to this sort of activity.

Taking a Mulligan

Yahoo has squeezed out another CEO -- the second one in less than a year. No word on whether Scott Thompson was fired via a phone call like his predecessor Carol Bartz, but the Web company once again has been left in the hands of an interim CEO. Last time it was CFO Tim Morse; this time global media leader Ross Levinsohn gets to handle the wheel until a new chief is found.

Thompson's departure came a little over a week after it was revealed that his resume listed a college degree in computer science that he had never earned, and that it had been listed there for quite a while -- long before Thompson ever started working at Yahoo. When it was revealed, Thompson insisted it was unintentional, but he didn't have very much support from anyone inside or outside the company. His decision to hit Facebook with a patent suit cost him points with Silicon Valley in general, and Yahoo's massive layoffs under his watch didn't make him much of a hero among the company rank and file either.

He also faced a very determined activist investor leading the charge against him: Daniel Loeb of hedge fund Third Point.

The question "what next?" doesn't just apply to Yahoo's search for a new leader. The company also needs something to do. It's still the fourth-largest Web company in the world, but it doesn't seem to have any special purpose. A little weather, a little sports, a little photo sharing, some email, but what's it's real unique talent? It lost search to Google, and it never latched onto social networking the way Facebook did. Cutting jobs and suing other companies was the extent of Thompson's plan -- as much as he had time to demonstrate, anyway. But what job can Yahoo do better than anyone else? Where can it be king?

Now Loeb finally has his way -- the CEO's out, several board members are gone, the rest of them were made to look like fools, and he and a couple of his allies have been given seats at the table. Best of luck turning what's left of Yahoo around, but it does make me wonder what brilliant master plan Loeb has in mind that made him fight so hard to get where he is. Now that he's in the control room, what's he going to do to revive Yahoo that hasn't already been done before?


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