Dan Hays

Verizon iPhone unlimited data won't last forever

January 10, 2011: 2:39 PM ET

It's a great ploy to win over new customers, but unlimited data plans will prove problematic for Verizon in the long term.

By this time tomorrow, millions of Americans who have been clamoring for an iPhone without AT&T service will finally have the option: Verizon Wireless is expected to announce the availability of the iPhone running on its network. Not only that, but if reports prove accurate, Verizon will allow iPhone users to sign up for its unlimited data plan.

That last part is a surprising move for Verizon (VZ). Analysts predict the mobile carrier will sell as many as 12 million units this year. AT&T (T), despite its efforts to improve network quality by expanding its infrastructure in areas like New York City and San Francisco, still ranks lowest among mobile carriers in Consumer Reports' survey for customer satisfaction.

In the short term, offering unlimited data seems like a smart move. AT&T killed its own plan last June in favor of usage-based data options. Its official explanation was that 98% of customers use less than 2GB of data monthly, but much more likely, it was an effort to increase adoption and lower consumption. To curry favor with current users, AT&T also lowed the prices for both plans and allowed current unlimited data subscribers to keep their plans for as long as their contracts last. More

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