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Verizon Communications (NYSE:VZ) announced its new data plans last week and some of them mirror rival T-Mobile‘s (NASDAQ:TMUS) plan features (except they’re more expensive). And the plans are already a huge success, according the nation’s largest carrier.
Verizon recently told FierceWireless that the new data plans — which now include rollover data and allow customers to used throttled data speeds when they go over their monthly data allowance — are some its most popular plans to date.
The carrier said that nearly 95% more customers signed up for its new plans than did for the company’s Share Everything plans back in 2012.
Additionally, the carrier said that 30% more of its customers signed up for its latest plans the first day they became available than did for its Verizon Plan on the first day of its launch last year.
Why the plans’ popularity matters
The new plans are a significant move for Verizon as they offer about 30% more data to its customers, but also cost anywhere from $5 to $10 more per month. Verizon isn’t forcing customers to upgrade their plans, so existing customers are free to keep the carrier’s former plans.
The apparent popularity of the new plans prove that Verizon can still add more revenue per user. While T-Mobile and Sprint have made gains in network performance and coverage, Verizon appears to be still cashing in on its position as having the best overall network performance, according to RootMetics.
But Verizon’s latest plans prove that the carrier isn’t impervious to T-Mobile’s onslaught customer gains, that have come from the carrier giving out lots of freebies. T-Mobile has gained 1 million or more net customers each quarter for 12 consecutive quarters, in part because of its ability to offer things like data rollover, free music and video streaming, ad other services.
T-Mobile was one of the first carriers to point out that Verizon was raising prices with the new plans and said that it was a bad copy of its current Data Stash rollover plan. On T-Mobile’s plan, customers keep unused data for up to 12 months to be used later. Verizon only lets its customers keep unused data for one month.
Here’s what Verizon is getting out of this
It’s bit surprising that Verizon’s new plans are seemingly a hit so fast. It’s possible there was want pent-up demand for rollover data plans. Verizon customers were also likely interested in the Safety Mode feature that allows them to go over their data allowance (albiet at very slow connection speeds) without being charged the overage fees they were on their old plans.
Verizon and other carriers have had to change part of their business models after once two-year contracts fell out of style and were replaced with equipment installment plans (EIP) for phones. That’s put some pressure on Verizon’s ARPU, which has slowly fallen over the past three consecutive quarters.
By offering something that customers want (rollover data and no-charge data overages), Verizon can both make its customers a little happier and charge them more money at the same time. That’s a difficult balance to pull off for any company, but Verizon’s latest sign-up numbers prove the carrier is successfully pulling it off.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.