Verizon cellular plans are a lot of things, but inexpensive or sold at a discount they are not.
The company has positioned itself quite well as a leading telecom both in terms of business accounts and as well as private, individual communications.
However, despite all of this growing market activity, the company’s product offerings remain some of the highest-priced accounts for consumers.
Why Is Verizon So Expensive? (Top 10 Reasons)
Background
Verizon didn’t appear out of nowhere.
The company was created in 2000 through a merger of the last vestiges of the old AT&T: Bell Atlantic, and GTE.
Bell Atlantic resulted from the government-ordered breakup of the original AT&T (otherwise known as Ma Bell) that dominated the phone industry as a monopoly for years until the 1980s came along.
The breakup into the Baby Bells created Bell Atlantic among others and a number of other spinoffs. (Pacific Bell was the one Baby Bell folks remember on the West Coast, for example.)
The merger of GTE and Atlantic Bell was a perfect timing point.
The Internet was just about to take off, and the cellular side of things was approaching the first golden age of small, portable smartphones that really began to connect well with the Internet.
From that point, Verizon also started building out its famous network coverage, epitomized by the well-known commercials of the Verizon tech guy constantly asking, “Can you hear me now?”
1. They Own The Biggest Market
The simplest and most practical reason Verizon is so expensive as a telecom choice is simply that they can.
Verizon has one of the biggest markets in the U.S. and continues to grow by gobbling up those of its competitors.
Most major corporations are using Verizon as their company employee device supplier as well as their mobile communications support.
That alone has launched Verizon into the mega-leagues by continuing to maintain growth and retain existing accounts year in and year out.
In addition to its success at the consumer level, Verizon essentially commands the market lead in cellular network market control.
As a result, with that much impact, the company has found it can sell its product at higher prices for quality and expansive delivery, and people will pay the price.
Financially, there’s not much of a reason for the company to lower its price points, especially given the fact that none of its competitors really presents a threat to Verizon’s continued growth and current position.
To the extent that another big player comes into the picture, Verizon could find itself having to react with lower pricing from increased competition.
For a few years now, that threat has been expected from two companies: Google and Apple.
Google has probably been the most active in playing around with the idea of launching its own telecom, experimenting with some Google-specific phone offerings a few years ago, but they didn’t take off well.
However, the company has more than enough reserves to push into the market and provide a real threat to Verizon if it wanted to.
Apple is the more logical contender given that the company is already well-positioned in the consumer telecom hardware side of things with the iPhone as well as the iPad.
The company also has the cash reserves and the ability to launch a full-frontal assault on Verizon’s market shares as well.
However, both companies find that it’s far easier to let Verizon handle the network, and they just push their products on top avoiding the capital investment.
The other potential player might be Amazon, but to date, it has not shown any sizable venture potential into telecom per se, instead, focusing more on cloud infrastructure and digital services available to any device or digital need.
2. Family Plans
The company has paid attention to the concerns of parents and has positioned itself to provide a viable communication product that parents can be comfortable with.
Despite the oddity of kids under 12 having a cell phone, where parents have accepted this is a must, they want to be sure their kids are operating safely online.
By providing devices and tools specifically designed to enhance parental control with screen time limitations, contact restrictions, geo-location, and download management, parents are being responsive and adding the associated accounts to their plans.
With a low-cost entry point, and parents hearing nothing but complaints from their kids trying to keep up with each other, the family plans seem to solve a problem as well as keep parents satisfied that their kids are operating safely in the telecom arena.
Of course, these benefits aren’t free.
They cost money, and as many families have more than one child, the costs add to the existing plan, increasing it anywhere from $25 to $50 a line per month.
3. Infrastructure Costs
It’s not cheap to be the best network or one of the best out there.
Verizon has sunk a lot of capital into its hardware across the country to make its network expansive as well as functional.
They started early, utilizing the capabilities and equipment of its forefather company, GTE.
The results have been a massive buildout of towers and connectors, expanding Verizon’s reach significantly, a fact that has also given it a solid selling point with customers over other competitors who tend to be trapped in urban centers only.
With a wide-open market in suburban and rural areas,
Verizon has made inroads into rural communities, establishing itself as the prime service to work with and worth the cost.
That has also reinforced the company’s price point instead of dropping it to bring on new customers.
It hasn’t helped that many competitors’ services have been lackluster in the same markets, proving the point.
4. Bundling Services
The big advertising package these days involves combining a phone service with a cable service with a streaming service.
Disney+ and Hulu have been the most popular, and Verizon has its deal with them just as AT&T has its combined package with HBO.
The resulting package is a marketing tease for consumers who already know they are going to pay a hefty price for Verizon’s phone service but feel like they are getting something extra with no additional cost.
In reality, the added expense of the other services is built into the Verizon package.
Verizon is not giving away streaming and cable services for free.
While on its face, consumers feel like they are getting a double or triple package of valuable services, in reality, their phone bill is significantly larger than competitive services from other companies.
However, the marketing is so effective for Verizon, they have been expanding their bundling as a result.
5. A Plan for Everyone
To account for parts of the market that may not be able to afford the full, comprehensive packages Verizon provides, they also provide “discounted” plans to allow entry into the company’s product line at lower price points.
These channels are stripped-down versions of their full-service plans, and they also require pre-payment versus billing after the fact.
The lowest starting point is approximately $35 per month, and things go up from there.
What customers discover pretty quickly is that the discounted plans are extremely restricted and almost non-functional for most calling outside of immediate local areas, at least not without incurring additional fees.
To get a functional plan that allows practical roaming, local and long distance, and a decent amount of data, plans end up costing people at least $60 a line if not more.
6. Coverage, Coverage, Coverage
The big selling point of Verizon tends to be its coverage.
The company provides more connection points, particularly in the rural areas, than most other major competitors and definitely far more than smaller players.
Again, the issue of urban versus rural comes into play, and Verizon has been busy building out the networking to support rural connections.
This coverage comes at a cost, however, and somewhere in the chain, Verizon has to recover its expenses to keep the system going.
That comes into play with account differences from one region to the next.
Similar to other large, nationwide companies, Verizon moves its costs around, addressing them with extra income made in larger, established markets that produce sizable profits.
Doing so allows the company to expand further into newer, immature markets that are not producing breakeven figures yet.
7. Pushing New Technology Faster
Verizon has been big on being on the forefront of the 5G network capability, beating its competitors and creating yet another marketing draw for folks who want the fastest mobile speed capability on an already established network.
5G has already proven itself to be quite compatible with high-speed streaming demands that are coming into vogue among many customers.
Add in the fact that COVID has pushed many into the digital age with daily web meetings and mobile communications, and the 5G spectrum really came into its own in 2020 for those accounts who are actively using the tech.
Again, these advances cost money, and Verizon has made sure to pass those costs onto the customers who want the service the most.
Verizon, however, was smart enough to avoid the Internet Service Provider trap.
Unlike many other telecoms, Verizon did not dive headlong into the ISP world the way that Comcast and AT&T did.
Instead, Verizon stayed true to its phone and digital device side, choosing to keep building its network strength that the ISP ultimately would have to rely on to reach and connect with mobile devices.
Verizon management clearly saw the two worlds were separate and that someone would have to make sure there was a network robust enough to handle Internet delivery to cellular devices.
Rather than splitting its attention with the ISP role, the company avoided a pitfall that sucked up significant resources from competitors to maintain account management.
8. Consolidated Communications
In 1997, Tomorrow Never Dies was released, pitting super British spy agent James Bond against Elliot Carver, a media mogul bent on world domination through digital communications, media, and telecom.
While the idea might have been a bit ahead of its time, there is no question that the battle for information and influence of markets, people, and politics today has been massively influenced by the crossroads of the Internet, mobile devices, and communication infrastructure.
The proof is in the fact that, thanks to digital communications, the U.S. Capitol was invaded on January 6, 2021 by its own people driven into a frenzy by QAnon, a digital persona with a cult following on the Internet.
While no one is labeling or suspecting Verizon of similar plans like those above, whether fiction or reality, there is no question that the company has been working very hard to position itself at the crossroads of mass communication, mobility, and telecom as well as entertainment now.
That combination has made Verizon instrumental and far more powerful than industry players that only focus on specific segments of the telecom world, a traditional market approach.
Because Verizon has been able to leverage its multiple positions under one strategy, the company is also able to command higher prices for its services in exchange for allowing access to its integrated communication platform.
This pay-to-play approach has paid off handsomely for Verizon and continues to be one of the most successful telecom strategies of the decade.
9. Significant Government Support
Verizon has also been very savvy in partnering itself with government agencies, from the smallest municipal office to the federal government.
In doing so, the company has become an essential component serving the multiple interests of government at every level.
Whether it be traditional phone communications, network support, streaming and broadband access, and now cloud infrastructure, Verizon has been a key player in landing big government accounts.
That creates a huge amount of cash flow for the company on a regular basis which, in turn, gives Verizon the ability to grow out its private side even faster than competitors.
The results end up being better tools with newer features offered at premium pricing, while the cost of development was financed by the lucrative government contracts funded in taxes from the same consumers.
It’s a double win for Verizon, both in corporate sales as well as consumer markets.
The relationships have also helped protect Verizon, a company that is no stranger to the halls of Washington D.C. and is quite adept in utilizing its own lobbyists and advocates to represent its interests and continued operational commitments with the government.
Again, Verizon kept itself out of the data world for government, keeping a role of network access, infrastructure, and equipment.
These traditional bastions then gave the company a solid footing in just about every major government agency, leaving the traditional network market to players like Oracle and AT&T, as well as newer entries like Google and Amazon.
As these companies continued to stake out their respective expertise, Verizon clearly became the dominant player in government phones and mobile devices over any other provider out there, especially in terms of bulk support and inventory access.
In turn, that gave Verizon the ability to build in locked pricing strategies on large accounts, driving up pricing overall with packages versus being out-priced on individual device models.
10. Verizon Continues to Be the “It” Account
Finally, a big reason Verizon can command higher pricing also has to do with the company’s success in being the “it” account to have among all the telecom providers in the U.S.
While AT&T and the former Sprint did provide sizable competition, Sprint collapsed and was taken over by T-mobile while AT&T remains the stuffy, conservative alternative always out of touch with the “new.”
The result has been a positioning of Verizon as the plan everyone wants to have for all its benefits and function when they can afford it, a bit like how Apple is the computer or mobile device people want when they can buy it.
This sense of quality or premium standard isn’t really based on rational logic.
It’s more of a “keeping up with the Joneses” aspect that’s been around in American consumerism since the 1950s when consumer choices started to appear.
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