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Muhammad Bazil
Muhammad Bazil
Articles (192) 

Verizon Sees the 'Gold' in Data - Wise Move

July 12, 2012 | About:

Regardless of the fact that carriers have renewed prospects in the data niche, not all of them have made notable advancements so far. Verizon (NYSE:VZ) has, however, risen up to the occasion and made notable advancements with regard to data and Internet. As an investor, this raises the usual questions. What does this mean for Verizon? On an operational basis, will it grow? Even if it does so, will it be able to suppress competition from other carriers?

In as much as it is not entirely possible to give conclusive foresight on these questions, it is possible to have a somewhat accurate idea of the expected sheers in the market. This is especially so after considering the endless debate spawned by the unveiling of the Share Everything Plan last month.

Creating a balance between technology and price

Verizon’s news plan is a demonstration of tact and aggression. It has seen the gold in data and is not wasting any time. Households are increasingly becoming the core customers of carriers. This is because practically everything in the house is turning into a data gobbler. As such, it becomes pretty expensive to own several smartphones, a smart TV and few tablets in the name of embracing contemporary technology.

For Verizon, this mounting problem of expense has passed by as a brilliant business opportunity. Instead of charging users per device, its new plan purposely shrouds all devices in the household under one plan. Minutes called and text messages sent will therefore not be a primary factor when considering prices. To add to the allure, customers have the option to choose the price option that matches their estimated monthly data needs.

By doing this, Verizon has created the much-needed balance between the requirement for being technologically forward and cost effectiveness.

I believe that this move is brilliant at the least. The technological space is all about moving forward while at the same time cushioning consumers from inevitable costs. Verizon’s plan will therefore leave everyone smiling. It will be able to make its money, and consumers will be able to meet their diversified data needs under flexible and manageable pricing systems.

The flipside

Every move in business, however good, always has a flipside. For Verizon, there are a few concerns among investors about the plan. Yes it is a good initiative. All the same, does it play an instrumental role in gleaning higher revenue?

A section of investors believe that the move may push Verizon to the hedges. This is because tightening up on products doesn’t really add up as far as investing is concerned. Most investors believe that diversification creates more options and ultimately reduces risks. The huge worry lies in the fact that some customers may seek other plans elsewhere in the event that they don’t appreciate Verizon’s "toned down" plan.

Personally, I remotely agree that the new plan may have a dire downside. Notwithstanding, I believe that bigger risks mean bigger returns for investors. In the same breath, I am sure that Verizon conducted in-depth research before rolling out the plan. The move is therefore calculated and based on credible driving factors.

Following suit

AT&T (NYSE:T) is also expected to roll out a similar plan. Although details of its plan are still in the dark, it is believed that its plan will charge users on a monthly basis. What grasps my attention about AT&T, is that it has perpetually formed a habit of coming second to Verizon.

The presumably richer player (just take a look at the disparity in market caps) always plays second fiddle. Its intentions to roll out a new plan started circling the media only after Verizon had rolled out its own plans. Verizon also has the largest 4G LTE network in the nation and in my point of view will make all the good money before AT&T comes to scrape in the leftovers.

Meanwhile, Apple is on a headhunt for carriers and T-Mobile is considered to be the next on its hit list. The market is bubbling with expectations, but I am pretty confident that Apple’s ongoing headhunt will have little or no effect in the long run. This is because practically every carrier will be licensed to sell the iPhone.

The real game changer lies in the ability to come up with innovative plans for consumers – something which Verizon has mastered. I recommend a buy.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

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