Verizon to Throttle Video Quality, Revamp Unlimited Data Plans--2nd Update
August 22 2017 - 6:10PM
Dow Jones News
By Ryan Knutson
Verizon Communications Inc. said it would start limiting video
quality for all customers across its network, months after the No.
1 U.S. carrier by subscribers launched unlimited data plans.
The video throttling technique, which is also employed by rival
carriers, came alongside new data plans that effectively raise the
price of Verizon's current unlimited data offer. The company said
it would limit video qualities for both users of its unlimited
plans as well as customers with monthly amounts of data.
Verizon said starting Wednesday it will sell an unlimited data
plan that doesn't stream videos in high definition, starting at $75
a month for one line, alongside an unlimited plan with HD quality
video, starting at $85 a month for one line. (Both prices include
discounts for enrolling in automatic payments and paperless
billing.)
The tiered unlimited plans illustrate how wireless carriers have
struggled to make money off increased data usage. For years,
carriers primarily sold capped plans that charged per gigabyte of
usage. But consumers, struggling to understand what constitutes a
"gigabyte," flocked to unlimited data offers.
When Verizon brought back an unlimited data option in February,
the company offered unlimited data, including HD quality video, for
$80 a month for one device. Both T-Mobile US Inc. and Sprint Corp.
had been targeting Verizon's customer base with unlimited
offerings, but both only allowed for lower quality video
streaming.
For Verizon customers on unlimited data plans without the HD
video option, which costs $75, the content will be streamed at 480p
DVD resolution on phones and 720p on tablets. The company said it
would limit video quality for all existing customers as well as
those with the HD video unlimited plans to 720p for phones and
1080p for tablets.
"We're doing this to ensure all customers have a great
experience on our network since there is no significant difference
in quality on a smartphone or tablet when video is shown at higher
resolution," the company said on its website.
While the reduced quality will significantly reduce the load on
Verizon's network, it is unlikely most customers will notice the
lower video quality. Typical smartphone screens aren't large enough
to show a major difference. Video throttling won't occur on Wi-Fi
connections.
Verizon says its network is performing well. Rather than spend
billions to acquire rights to additional airwaves, in recent years
it has installed more cellular antennas closer to the ground with a
smaller footprint, so that fewer customers connect to each one,
lowering congestion.
Most unlimited plans come with a soft-cap that reduce speeds on
congested cell sites after using about 22 gigabytes or more data
during a billing cycle. But customers with the lower-cost unlimited
Verizon plan will be "de-prioritized" at all times, meaning
customers could face reduced speeds at any time. Verizon says those
reductions vary widely but shouldn't be noticeable.
Walt Piecyk, an analyst at BTIG research, said the latest
changes raised questions about Verizon's network. "Is Verizon's
price increase a sign of dwindling network capacity or a path to
revenue growth?" he wrote in a research report.
T-Mobile has also raised prices slightly recently. Taken
together, the moves might signal the wireless industry isn't as
competitive as people think, Mr. Piecyk said.
Recent analysis from independent network companies have offered
mixed results on Verizon's network. A report from OpenSignal found
Verizon's network speeds have slowed slightly following the launch
of unlimited. Another firm, RootMetrics, still rated Verizon's
network the fastest and most reliable.
Write to Ryan Knutson at ryan.knutson@wsj.com
(END) Dow Jones Newswires
August 22, 2017 17:55 ET (21:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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