Verizon (NYSE:VZ) Enters the Prepaid Data Wars

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By Ross Schwartz on January 21, 2015 Technology & Software

Verizon Communications Inc. (NYSE:VZ) has silently doubled data allotment on its prepaid plan called AllSet, and by doing that the company has entered the market of prepaid data wars. Verizon’s (NYSE:VZ) AllSet plan does not provide any contract services, without the requirement of a complete credit check. The company has the highest number of postpaid subscribers which are highly productive for the company and that is the reason why Verizon (NYSE:VZ) never paid much attention to its prepaid market.

Amongst the line of wireless carriers, Verizon (NYSE:VZ) was the last one to offer its prepaid customers 4G LTE data plan, which was launched by the company in the previous summer. With the growth of the postpaid market and with the increase in the price wars, many wireless carriers have shifted their focus towards the prepaid market.

Verizon’s (NYSE:VZ) AllSet plan is priced at $45 and it provides the subscribers with unlimited texts, unlimited calls as well as unlimited international messaging to associating carriers and the service is available in countries like Canada, Mexico and Puerto Rico. Verizon (NYSE:VZ) previously just offered 500 MB on its data plan but now the company has doubled the data allotment and it is now 1 GB.

To make things even better Verizon (NYSE:VZ) is offering free 500 MB data to customers who are willing to register for the auto-pay option along with the AllSet plan. Verizon (NYSE:VZ) even has something for the users who want more data. The company allows the users to adjust their plans by adding 500 MB for an extra $5 or 1 GB for $10 or 3 GB for $20.

However, the additional data will not be unlimited it will last from somewhere between 1 month to 3 months time. The reason behind Verizon’s (NYSE:VZ) decision of enlarging its data allotment might have generated due to similar steps that were taken by its competitors like T-mobiles and Sprint Corporation. Both these companies also launched fresh prepaid plans to compete in the growing prepaid market.

The postpaid market supports plans which occur without any contract and are installment based. According to analysts this is the union point of the two markets, postpaid and prepaid. Verizon’s (NYSE:VZ) actions also indicate the merger of the two markets. Double data promotions was first launched by AT & T, followed by Verizon (NYSE:VZ) and Sprint. The wireless carriers in an effort to surpass each other continuously try to gather more and more subscribers to their data plans.

AT & T Inc. has also been trying to dominate the prepaid market through its Cricket brand. The competition between AT & T and T-mobile has been going strong and in order to leave T-mobile behind AT & T even tried to attract more subscribers by giving them switching incentives.

Due to the intensive competition there has been a lot of pressure on the companies and the price war has been costly. AT & T and Verizon (NYSE:VZ) both speculate that their 4^th quarter margins will be targeted by the increased competition in the wireless market.