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Verizon Mulls $5 Phone Service Plan

Posted on: Tuesday, 17 February 2009, 15:00 CST

In an effort to curb attrition in its landline phone business, Verizon Communications is considering a new $5 per month home phone service plan that would allow customers to receive calls, but only make outbound calls to 911 and Verizon customer service.

The company is also looking at a $10 per month plan that would allow some limited local calling ability, comparable to the company’s lowest cost calling plans of $20-$25 per month.  Its nationwide plans typically run about $40 per month.  

Verizon is considering the bargain landline plans in an attempt to slow the loss of landline revenues as customers switch to mobile or VoIP-based phone services.  The low rates could also be an attempt to keep its high-speed Internet customers from switching over to triple-play service plans offered by cable network operators.  Indeed, both of the new services under consideration may only be available to customers who also subscribe to the company’s high-speed Internet services.

However, the company said it is keeping its options open, and that it has made no firm decisions yet with respect to the new service plans.

"This is something we are looking at," Verizon spokesman John Bonomo told Reuters.

"Any of the details could be changed. Things along those lines are things we're looking at."

While company spokesman William Kula said Verizon had not yet decided on a timeframe for the new services, a Wall Street Journal report cited unnamed sources that said they may be offered as early as this summer.

"We're merely considering a wide range of offers," Kula told Reuters.

"We will continue to compete very aggressively against the cable companies as well as the voice over the Internet companies."

According to Kula, the primary reason people want to keep their landline phone service is for safety and reliability.

"We're looking at a number of different types of plans that would encourage people to continue to use their landline phones," he said.

Chris King, an analyst with Stifel Nicolaus, said it made sense for Verizon to offer lower cost options to customers who were otherwise planning to disconnect their home phones.

"It's $5 or $10 they wouldn't already have," if they lost the customer, King said.

However, he adds that such plans would have limited appeal.

"I think you're talking about a small percentage of the population who'd want to keep a landline to just dial 911, maybe for the elderly population if (they) don't have a cell phone."

"If you can't call anybody back I don't think you're talking about a sizable population base it would appeal to."

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On the Net:

• Verizon Communications

Source: redOrbit Staff & Wire Reports

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