BLOG STARTUPS, VENTURE AND THE TECH BUSINESS

February 9 2011
by John Backus

Verizon’s Sneaky iPhone Data Throttling Strategy: Can You Hear me Now?

I think the Verizon iPhone is going to be big, for Verizon as well as for Apple. While it is not going to derail the proliferation of Android phones, I do think it will slow down the Android penetration, for a while, at least in the United States.

But is Verizon trying to pull a fast one on its new iPhone users? They are knocking (rightfully so!) the quality of ATT’s network, and talking up their unlimited data plan.

More on that question in a minute.

First a personal anecdote. My son turned 12 last January, in 2010. For his birthday I gave him his first phone, and he picked the first Droid to come out on the Verizon network. Mind you, his brother had an iPhone, and I had an iPhone. But it was his choice. He wanted to be different. Besides he already had an iPod Touch. He was frustrated early on, figuring out an easy way to get his iTunes to work with his Droid, but eventually figured out a workaround. The way of downloading apps in the Android world wasn’t ideal, but he figured it out again. He continued using his iPod Touch though as well because they had many different and better apps, and it was easier to use.

Last month his Droid started having some hardware issues related to the physical keyboard. his birthday was coming up, and again I offered him a new phone. Lots of cool new Android OS phones out there. But he wanted the new Verizon iPhone. Why, I asked? “Because it is just easier to use, dad.”

All of the industry experts are predicting that Android is going to be the dominant smart phone OS by a mile. All of the hardware manufacturers are making Android OS phones. The 1980’s PC vs MAC analogy comes up often, with the PC winning 95%+ of the market for a while. Lots of gnashing of teeth about Apple repeating the same mistake by controlling the hardware and software platforms.

But I wonder. And I wonder more after watching a focus group of one with my 13 year old son.

IBM and Microsoft dominated the PC world because they had the best “business machines” and focused smartly on office productivity software. Apple was more focused on consumers, teachers, students, and designers.

Perhaps smartphones are different. The UI matters more on a smartphone. The quality and quantity of consumer-focused apps matter as well. I think the PC analogy is a bad one, and I think Apple’s ecosystem strategy will continue to surprise the experts and have more market share than people expect. Good for Apple and likely their stock price.

But back to the headline question. Is Verizon trying to pull a fast one with their “game changing” unlimited data plan, trying to attract ATT customers who were ticked off that they no longer offered an unlimited data plan? I wonder…..

Today I received a seemingly innocuous email from Verizon about my son’s new iPhone. It read:

I didn’t think much of it but was curious.  I clicked on the link, it took me to a page with dozens of documents, and, there it was:

Read the second paragraph.  If you are in the top 5% of data users, they are going to reduce your bandwidth for up to two months.  Hmmmm.  I didn’t hear them talking about this when they announced their unlimited data plan.

And the icing on the cake? This is the top 5% of ALL data users on the Verizon network. Not just the top 5% of iPhone data users. Consumer reports did a study a year ago, that showed iPhone users at 273mb per month and Blackberry users at 54mb per month. I am guessing fully 25% – 50% of new Verizon iPhone users will be in the top 5% of Verizon data users…..

What do you think?  Good idea?  Or just plain sneaky?

John Backus 2/9/11

COMMENTS

February 9 2011
by Jamie

Just plain sneaky…

February 9 2011
by Steve Cissel

Sneaky indeed.

February 9 2011
by Meredeth O

Sneaky enough to keep me staying with my unlimited AT&T plan and I told Verizon so in an email last night.

February 9 2011
by Sean

I have the iPhone for VZ and I saw that a while back. I just hope all VZ iPhone users just use a lot more so fewer of us will be in the top percentage, especially top 5%.

March 8 2011
by Jason

Not really sneaky. I use well over a gig of data, 2.3GB my highest ever for a month of data usage. There are people out there who hit the 5GB cap. Those are the ones who are going to be throttled, not your son and his menial testing and infrequent web browsing. I had a Droid Incredible when I hit those data numbers, my usage on the new VZW iPhone is still unknown at this point. The people this will target are the people who are using their phones to tether to a laptop, who watch a bunch of streaming media on their phone and the like.

Oh and btw, have you ever surfed the web on a Blackberry? Also do you know about the blackberry data compression technology that they use? Of course a blackberry is going to use WAY less data than an iPhone (or a Droid, which you fail to mention though it would be a better comparison.) A) the BB web experience sucks and B) their data compression tech is great and a large reason for the amazing battery life.

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