Verizon recently revealed that it is bringing back unlimited data plans, but analysts from firms like Jefferies, UBS, and New Street have some reservations about if Verizon’s network can handle the added strain, especially in the area of network user capacity. You don’t have to look far in the past to find reports of Verizon taking a firm stance that an unlimited plan does not benefit the carrier, and is not the right fit for most consumers. While the plans are not entirely unlimited in every way, featuring caps like 10 gigabytes of tethered data and users who chew through 22 gigabytes of data being deprioritized like on other networks, the strain on Verizon’s network resources promises to be greater than ever before, should the new unlimited option catch on.
Analysts at Jefferies believe that Verizon’s previous stance against unlimited plans was not flipped on its head solely out of necessity; they posit that Big Red’s newfound enthusiasm for big data users’ subscriptions could also be due to a new network approach involving small cells, or plans to net licenses for more spectrum in the wake of the FCC’s spectrum auction, which is almost at its definitive end. UBS, on the other hand, chimes in saying that the unlimited data revolution could eliminate the point of zero-rating a network’s own content, causing a convergence of sorts across industries because carriers are scrambling to find revenue streams outside of data, leading them to push and optimize their media solutions. Jonathan Chaplin of New Street said that Verizon may end up caving under the pressure on their network and buying somebody up, such as Charter Communications, in order to increase their available spectrum pool. Rich Karpinski of 451 research says that the unlimited plan’s demand could grow slowly, giving Verizon time to adapt. He did say, however, that users will vastly increase their data usage, including with things like 4K video.
Jefferies’ stance is highly speculative, but may be right on the money, especially since it coincides with that of Chaplin. If Verizon’s network is indeed unable to handle the strain in its current condition, a network change is indeed in order. The FCC’s spectrum auction is going to end soon, with quite a few smaller spectrum holders on the ticket; snapping up one or more of those types of entities would be well within Verizon’s wheelhouse and budget, and would net them spectrum licenses that they could use for a quick, cheap, and easy expansion of their LTE network. A small cell buildout is a similar proposition; using their massive wallet, Verizon could conceivably bring the rollout to bear quickly and widely. UBS’ stance, however, deals not with the network itself, but with profit; in this new business model, carriers have to find ways to not operate at a loss, and a media expansion of Go90 into something bigger than its current form may be right up Verizon’s alley. Naturally, all of this fits nicely into Karpinski’s take.