Verizon to Slow Down Data Hogs


Even as wireless giant Verizon prepares to add the iPhone to its wireless network in the United States, it has announced that it will curb data transfer speeds of those subscribers who represent the top 5% bracket when it comes to data usage. The company has added that such speed curbs would only be imposed during periods of network congestion.

This change in policy takes effect from Thursday and is currently applicable only to new subscribers. A number of telecom networks including T-Mobile have adopted similar measures recently. These measures are collectively referred to as “throttling” and are used to ease network congestion and reduce bandwidth costs.

While these measures will not affect most of Verizon’s 94 million subscribers, many have expressed doubts about the new policy. Analysts have linked the sudden policy change to the imminent introduction of the iPhone on Verizon’s wireless network. Only 26% of Verizon’s subscribers currently use smart phones and this number is expected to go up exponentially once the iPhone debuts on Verizon’s network on 10th February. Verizon is also bundling a $30 a month unlimited data usage plan with its iPhone and this is expected to lead to a huge increase in bandwidth demand going forward.

Moreover, AT&T’s roll-out of the iPhone also offers a number of valuable lessons to Verizon. AT&T was unable to manage the surge in bandwidth demand that followed the release of the iPhone and ultimately stopped offering unlimited data plans last year; Verizon obviously wants to avoid a similar predicament. On the other hand, the company officially maintains that the change in user terms has nothing to do with the forthcoming iPhone debut; according to Verizon Wireless spokesman Jeffrey Nelson, “This is clearly something we’ve been looking at for some time and introducing now, there’s nothing magic about the timing.”

Meanwhile, rival AT&T has refused to comment about the policy changes made by Verizon. AT&T has faced similar problems with network congestion and a prominent AT&T executive admitted back in December 2009 that 40% of AT&T’s network traffic is represented by only 3% of its subscribers. Instead of “throttling” its subscribers to avoid network congestion, AT&T has chosen to end unlimited data plans and has introduced multi-tiered plans with limited data use.

Even as the iPhone is set to release on Verizon’s network next week, the network major has upgraded its online ordering system in anticipation of huge demand. Barclays estimates that 500000 iPhones would be sold by Verizon in the first three days alone.

In order to ensure that Verizon’s iPhone debut doesn’t eat into its subscriber base, AT&T has launched a number of measures to maintain subscriber loyalty. It has doubled the data usage limit for users who subscribe to its tethering plans for iPhones. AT&T has also sent an e-mail to its subscribers highlighting the fact that users can make voice calls and access the internet simultaneously on AT&T’s version of the iPhone while this isn’t possible on Verizon’s iPhone.

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