Verizon Wireless (New York, N.Y.), a mobile service provider, will stop offering new customers unlimited data service plans starting on Thursday.
According to a Verizon spokesperson, Brenda Raney, existing customers can continue to use the unlimited plan they are already on, new customers will have to use one of the new data plans.
On the new data plans Verizon Wireless plans to charge $5 more per month than AT&T Inc, which stopped offering unlimited data services last year.
Under its new terms, customers who limit their data use to 2 gigabytes (GB) will pay $30 a month, according to the venture of Verizon Communications Inc and Vodafone Group Plc, which currently charges its customers $30 per month for unlimited data use.
According to Raney this is to allow customers to, “pay for what they need.”
To put this in perspective, 2 hours of streaming music to your cellphone every day would generate 9 GB of data downloads, according to the Verizon Wireless online data use calculator.
Customers who use more than their plan allows will have to pay $10 for every extra Gigabyte of data they use, according to Raney. This charge is in line with what AT&T offers today. Verizon's heavier data users will also be able sign up for a $50 per month plan for 5 GB or $80 a month for 10 GB, Raney said.
Since Verizon is not cutting its lowest monthly fee for data services, Pacific Crest analyst Steve Clement said the move would be "relatively neutral for (Verizon's revenue), with the potential for upside as people take larger buckets of data or start paying the fee for going over their limit."
Customers who view data fees as a key factor might move from Verizon to rivals such as Sprint Nextel Corp, which still offers unlimited data services.
"The risk you run, I guess, is that people balk at caps and move to carriers that don't cap data," Clement said. "People make carrier decisions for lots of reasons. I don't know if the amount of data is high on your list."
(Reporting by Sinead Carew; editing by Matthew Lewis and Andre Grenon)