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Verizon Wireless Will End Unlimited Data Plans for IPhone

Verizon Communications Inc. will stop offering unlimited data plans for Apple Inc.s iPhone as soon as this summer and switch to a tiered pricing offering that can generate more revenue and hold the heaviest users in check. Photographer: Denis Doyle/Bloomberg
Verizon Communications Inc. will stop offering unlimited data plans for Apple Inc.s iPhone as soon as this summer and switch to a tiered pricing offering that can generate more revenue and hold the heaviest users in check. Photographer: Denis Doyle/Bloomberg

March 1 (Bloomberg) -- Verizon Communications Inc. will stop offering unlimited data plans for Apple Inc.’s iPhone as soon as this summer and switch to a tiered pricing offering that can generate more revenue and hold the heaviest users in check.

The carrier, which began selling the iPhone last month, now offers $30 unlimited data service on the device. Such plans on the handset are “not a long-term solution,” Chief Financial Officer Fran Shammo said today at a Morgan Stanley conference.

Verizon Wireless, co-owned by Vodafone Group Plc and Verizon Communications, ended AT&T Inc.’s four-year exclusive hold on the iPhone in the U.S. Analysts, including Wells Fargo & Co.’s Jennifer Fritzsche, estimate Verizon may sell 2 million iPhones this quarter.

After beginning iPhone sales in February, Verizon said it may limit the download speeds for some customers, who are among the top 5 percent in data consumption, in areas where they risk jamming the network. Verizon also has an opportunity for additional revenue as customers adopt smartphones, such as the iPhone, because they tend to use more data than customers with more traditional devices, Shammo said.

“We have a very big opportunity at Verizon Wireless because 67 percent of our customers are either feature phones or multimedia phones,” which have optional data plans of about $10 per month, said Shammo. “We see the potential of our customer base spending in that $30 to $50 range.”

Online iPhone Sales

AT&T in June stopped offering unlimited data plans, except to those already under contract. The Dallas-based carrier offers a $15 plan for 200 megabytes of data monthly or a $25 plan for 2 gigabytes of data.

Customers to date have bought 60 percent of their Verizon iPhones online, rather than in stores, Shammo said at the conference in San Francisco. He didn’t give details on the number of units sold or on the planned tiered data-pricing plans.

Later this month, Verizon will begin sales of the iPhone in smaller retailers and other storefronts. Today it is available primarily online, in Verizon and Apple stores and at the largest retailers, such as Best Buy Co.

Verizon Communications, based in New York, fell 90 cents, or 2.4 percent, to $36.02 at 4 p.m. in New York Stock Exchange composite trading. Apple, based in Cupertino, California, lost $3.90, or 1.1 percent, to $349.31 on the Nasdaq Stock Market.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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