Why is Verizon WiFi so expensive?
Verizon is a leading global telecommunications firm based in the United States of America. They offer wireless phone service, home internet service, and other connection services to millions of customers in the United States. However, many customers have complained that they pay a lot of money for Verizon services, particularly their WiFi hotspots. In this blog post, I will try to describe some reasons that make Verizon WiFi more expensive than the services of its rivals.
Verizon has a higher ROI compared to the total number of points accrued.
Given that Verizon is a large corporation, it focuses on the return on investment (ROI). Their shareholders have big expectations of financial performance growth year after year. To compensate for this, Verizon makes more revenue per customer through the overcharging of WiFi access charges. While the volume may go down, total revenues increase since the few people who need the service will be willing to pay the high prices. For Verizon, it means that the company can recover the costs of equipment and infrastructure in a shorter time with less but more profitable WiFi clients.
A majority of the Hotspot users expressed a high willingness to pay.
The majority of Verizon WiFi hotspots are found in airports, hotels, train stations, and cafes. Public WiFi users on these sites are normally willing to pay for the services offered on these sites. They require interconnectivity during their mobility or when working from distant locations, and they lack time. Verizon benefits from this necessity by increasing rates by 20-30% in regions with a large number of travelers. The company realizes that the target users have little option to substitute the service and will need it anyway irrespective of the price.
Greater Number of Small Cell Sites Needed for 5G
As Verizon continues to expand its 5G infrastructure, the company has discovered that high-band 5G necessitates a much larger number of small cells than 3G or 4G. It remains very costly to acquire permits for the real estate, lay power and fiber cables, place radios/antennas also meet leasing and maintenance costs for thousands of small cell nodes. The 5G provides high speed of internet connectivity but the cost required to build 5G is extremely high. Verizon offsets a portion of these costs through the implementation of premium 5G pricing.
Roaming charges have been done away with
In the year 2016, Verizon, other mobile carriers, and the like succumbed to the pressure exerted by their consumers and decided to remove the domestic roaming fees. In the past, roaming charges were very lucrative and ranged from $2- $5 per minute. Currently, Verizon has had to increase WiFi revenues in an attempt to offset the declined roaming revenue due to the use of smart mobile devices away from home. This financial shortfall is helped by raising hotspot prices.
Bundling Services Lowers Costs
Verizon has price promotions where they offer lower prices for bundled services such as home internet and wireless data. This is quite different from costly WiFi packages that are offered on stand-alone bases to tourists and other workers from home. Verizon reduces rates for households that subscribe to multiple high-margin services and captures more lifetime value per account. Mobile users on cross-service bundles in effect are partially supported by standalone WiFi users.
Focus on Network Quality and Stability
The adage that ‘nothing in life is free’ is not far from the truth as far as Verizon WiFi is concerned. Verizon which is ranked as the best telecom in terms of network quality, speed, and coverage spends tens of billions in infrastructure development and maintenance yearly. This over-proportionate capital expenditure results in high service charges that are recovered from the subscribers. Pricing it up for the hotspot plans always recalls the underlying network of Verizon on the same line. It’s not just the price tag that comes with being #1.
Consequently, Verizon can use shareholder obligation, hotspot zones, 5G small cell expenses, elimination of appealing roaming charges, cross-selling benefits, and overall focus on network dominance to explain why it can afford to set higher WiFi prices. When the traveler and the remote worker require connectivity the most, Verizon makes it possible at a premium price.
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