Verizon's Rising Fees Still Makes Sense

Rich Tehrani : Communications and Technology Blog -
Rich Tehrani
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Verizon's Rising Fees Still Makes Sense

Recently I commented about how Verizon's doubling of its early termination fee to $350 makes sense as the company needs to keep investing in ensuring its network is the best in the US. I may be the only person who appreciates having a fee go up as evidenced by the noise from journalists which is not subsiding. One of my favorite writers and video producers, David Pogue of The New York Times comments today that Verizon is gouging and has a plethora of ideas the company can implement to save consumers money.

Pogue has the following and very interesting comment to share:

Why wouldn't it be a hugely profitable move to start pitching yourself as the GOOD cell company, the one that actually LIKES its customers?

Verizon has some of the best customer service in the country. It has the best network by far. Everyone seems to want to switch to Verizon if they were to carry the iPhone for example. This is because the company has made absolutely massive investments where the competition has cut corners on a relative basis.

So perhaps the most succinct question to pose is what is the cost of being on the best network, having the fastest data download speeds and the least dropped calls? For many, there is no price tag too high to pay for these features and parting with an additional $5/month for phantom data charges and even more for high termination fees is fair.

I look at Verizon Wireless like I look at BMW. Both tout relatively low prices to start. But if you purchase a 328i, metallic paint will cost you $550. Cruise control costs $2,400! Navigation (which Google now gives away) is $2,100, and 19" wheels will cost you over $5,000!

If you think BMWs make some of the best cars around, you hold your nose and pay. Ditto for Verizon Wireless.

Verizon has always been the most restrictive carrier around and they locked down Bluetooth on their devices for many years except for pairing with a headset. Likewise, GPS has been locked down on most devices unless you purchased VZ Navigator for a minimum of $9.99/month or $2.99/day.

But as a customer, these annoyances and high fees were balanced by consistent spending of billions of dollars on wireless and now fiber networks.

Users should keep in mind they can always switch to AT&T, T-Mobile or Sprint if they think Verizon Wireless service isn't worth the extra money.

In fact the massive defection away from Sprint shows consumers consider more than price when it comes to making phone/network purchase decisions. In fact, I would say from a pricing perspective, Sprint may be the most customer friendly company around. I would posit that if AT&T Mobility didn't have the iPhone, consumers would be fleeing from them as well.

The iPhone threw Verizon for a loop and as predicted it is getting clobbered because it did not have the foresight to work with Apple when it had the chance.

So now, the enemy of its enemy is Google and Verizon is allowing a number of new Android phones on its network. They will get a cut of ad revenue by doing this but they are giving up virtually all services which they used to be able to charge for. Google just gave away turn-by-turn GPS for example meaning Verizon can no longer charge $10/month for the same service.

Moreover, Google will roll out dozens of new services which will be ad supported. Verizon will not be able to launch competing services as we all know a carrier can't compete with a software company.

In a moment, Verizon went from being the most closed network in the US to perhaps the most open and there is a cost associated with this move. Again, this is all pro-consumer behavior.

In fact, it seems at this point Verizon has leapfrogged AT&T in terms of openness. Especially when you consider the restrictive policing of the App Store by Apple/AT&T. Anyone who has seen the rich applications and joyous battery-sucking multitasking available on a jailbroken iPhone understands how users are being penalized by Big Brother Apple/AT&T.

So the full question to those upset with Verizon's fees should be, would you pay more for the best network and the most open ecosystem where you can take advantage of the best applications and service values around without the worry of a nanny telling you what you can and can't do?

The author switched from Verizon to AT&T because he wanted an iPhone. For about a year he carried around a Verizon phone for voice and an AT&T phone for data but that proved cumbersome and now he experiences dropped calls and other network snafus which he didn't deal with on Verizon Wireless. He not so secretly despises the App Store Nanny.

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