It’s amazing what a little bit of competition will bring. Today, Verizon announced that its customers could use the iPhone on the Verizon network. That means that, for the first time, AT&T and Verizon are both competing directly against each other for iPhone customers. What is the first thing that Verizon turns to in order to compete against AT&T? Unlimited data. This should come as no surprise – competition in data services usually pushes businesses towards all-you-can-eat.
Verizon clearly thinks that unlimited data is important enough to customers to make it a core of its iPhone campaign. Although it is more profitable to create data bucket and charge overage fees, Verizon recognizes that people prefer unlimited data even if Verizon’s bottom line does not.
While this is great news for iPhone enthusiasts, it is a sad reminder to most wireless subscribers that they do not live in a particularly competitive world. This summer, AT&T moved away from offering unlimited data. Verizon also announced that it was not planning on offering unlimited data on its new 4G network.
History suggests that competitive markets push companies towards unlimited data (in fact, it woudn’t be a surprise if AT&T responded by offering unlimited data too). As we have discussed before, a highly competitive dial-up Internet market drove ISPs away from hourly charges to unlimited offerings. A much less competitive wireless market has allowed carriers to avoid such a fate.
It is great to see that the iPhone has the power to create true competitive pressure in the wireless industry, even if it is only on a small scale. However, it would be even better if it didn’t take an iPhone to bring customers the fruits of competition.