Sunday, October 14, 2012

Why an $800 unsubsidized Verizon iPhone makes sense

I've been struggling with a decision about how to upgrade my Verizon iPhone 4 (3G data) to the new Verizon iPhone 5 (with super fast LTE data).

The issue is that, now that LTE is available, data speeds are going to go through the roof. Rough tests have shown download speeds 10x faster than existing 3G plans, and many people claim LTE is faster than their home wireless connection. Crazy.

All that said, no doubt in the future I'll be increasing the amount of mobile data I use, probably even significantly.

Verizon knows that too. So anyone with a "grandfathered" unlimited 3G data plan is required to drop the plan and settle with either one of these new Share Everything plans (which are an intensely bad deal for people who don't share data on a family plan, and would require my monthly bill to go up about $25/month) or we have to drop to a 2Gb "tiered" (read "limited") data plan with a built in cost of $10/1 GB data overage charge. Why did they make 2Gb the limit and overages (relatively) cheap? Because now that data is fast and ready, everyone's going to be using it like crazy, and Verizon knows it.

The only way to keep your existing unlimited data plan when you switch your phone to LTE is to not buy a new plan. In other words, skip the subsidy on the iPhone and just buy a new iPhone at not-on-a-contract full price. That's expensive ($749 for the 32GB iPhone 5, but here's why I think it is worth it.)

The standard line from Verizon (and even some sales associates at the Apple stores... though the guy in downtown SF today was totally on the same page as me and didn't try to steer me away from keeping unlimited) is, "96% of Verizon data customers use well less than 2GB/month", in fact most people use 500Mb or so. While that may be true (in fact, my average monthly usage is about 500Mb)... that's my 3G USAGE. Comparing this usage statistic to LTE data is like saying "last week the stock market went up 1%, and so this week it'll be about the same". It's like comparing Apples and super-fast-blazing-instantaneous-awesome Apples. LTE data is not 3G data - not only does it come fast and ready, but there is NO DOUBT in my mind that Apps are going to start taking major advantage of LTE data speeds. In fact, Netflix already does. I just read somewhere that 1hr of 720p movie streaming from Netflix is approx 2Gb. 1 HOUR ONLY. That's your entire month of data in 1 hour if you switch to the tiered plan. Overages, here you come. I am no doubt going to make a lot more Facetime calls over LTE now that it's available, and I often spend a couple hours Facetime calling my family on the weekend when I am out and about. Remember, Facetime is like a light version of Netflix streaming... well, except that it's not that light. It must be lower quality than Netflix, but I wouldn't be so fast to jump to conslusions... the new front-facing camera on iPhone 5 is 720p. Same quality as that Netflix statistic. And when you are Facetime calling, remember you are both downloading AND uploading video at the same time, essentially streaming 2 directions at once. (Read: a lot of data transfer). If the "pipe" of data is larger, and it's WAY larger with LTE, there is no doubt that Apple is going to tweak Facetime so that the quality is better, the video is more smooth and the sound is clearer. Why they heck wouldn't they take advantage of the new technology!

Verizon just offered unlimited shared voice and unlimited shared texting on their new share plans, and capped data rates to a miniscule 1 Gb shared to start with. What does that say? Talking and texting are a thing of the past, and data is the only thing you're actually going to use in the future. That's why they are betting their bucks on it.

Annoyingly, Verizon didn't support their long-term, loyal customers on this one. AT&T allowed existing unlimited grandfathered plans to be carried forward to new 2 year contracts with subsidized phones. Verizon instead is making their customers pay full price for these phones to maintain unlimited speeds. (Of course, AT&T is going to "throttle" data speeds if users use more than 5 Gb/month, and also is restricting Facetime usage to WiFi only if you're on an unlimited plan). At least Verizon is not restricting how you use your data, except you still can't tether your phone. This "makes sense", but is also frustrating as other countries (eg Canada) doesn't restrict how you use your iPhone data plan. Oh well.

Anyway, that was my thought process going through this. I was struggling back and forth to decide what to do as the difference between an iPhone 5 subsidized ($299) and off-contract ($749) is substantial, and you do really need to consider whether this sort of "future-proofing" is worth that much. It isn't right this second, but I'm sortof betting the bank that it will be very useful in the future, and I'd rather not be forced into a limited plan now and give up on future yet-to-be-invented apps and mobile data benefits.

On that note, I better put my wallet on ice, it's currently on fire.

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