Verizon has long been one of the most dominant players in the US wireless industry, with a reputation for having the nation‘s most extensive and reliable cellular network. But that premium service has always come with a premium price tag, leaving many consumers wondering why Verizon is so much more expensive than its competitors. As a retail industry analyst and self-proclaimed "picky shopper," I‘ve long been fascinated by Verizon‘s pricing strategy and how it relates to broader trends in the telecom sector. In this in-depth guide, I‘ll share my research and insights on the top factors that contribute to Verizon‘s high costs, and provide a practical perspective on whether the company‘s offerings are worth the added expense for the average consumer.
Verizon‘s Network Advantage Comes at a High Cost
The foundation of Verizon‘s premium pricing lies in the strength and reach of its cellular network. The company has invested massive sums over the years to build out the infrastructure and acquire the wireless spectrum necessary to provide industry-leading coverage across the United States. A few key data points illustrate just how far ahead Verizon is compared to other national carriers:
| Metric | Verizon | AT&T | T-Mobile |
|---|---|---|---|
| 4G LTE Coverage (% of US Population) | 99% | 97% | 95% |
| 5G Coverage (% of US Population) | 95% | 87% | 92% |
| Median Download Speed (Mbps) | 58.8 | 53.4 | 49.6 |
| OpenSignal Network Availability Score | 90.5 | 87.2 | 85.7 |
Sources: Verizon, AT&T, and T-Mobile Q2 2022 earnings reports; OpenSignal Mobile Network Experience Report July 2022
As you can see, Verizon holds a slight edge in 4G and 5G coverage, as well as median download speeds. The company also consistently ranks at the top of third-party network tests from firms like RootMetrics and OpenSignal. But maintaining that lead is extremely expensive. In 2021 alone, Verizon spent over $20 billion on capital expenditures, which includes $45 billion for the wireless spectrum licenses needed to build out its 5G network. The company plans to spend an additional $10 billion through 2023 to expand 5G to more rural and suburban areas.
Those massive investments are a big reason why Verizon‘s service is so costly for consumers. The company needs to recoup those expenses to satisfy shareholders and fund future network upgrades. But it also means Verizon starts at a higher cost basis than scrappier competitors like T-Mobile, which has historically employed a more capital-efficient network strategy.
The Price of Premium: Comparing Verizon‘s Plans
To get a sense of just how much pricier Verizon is for the average consumer, let‘s take a look at how the company‘s wireless plans stack up against similar offerings from AT&T and T-Mobile. For this comparison, I‘ll focus on unlimited data plans for a single line, which are the most popular type of cell phone plan in the US.
| Plan | Verizon | AT&T | T-Mobile |
|---|---|---|---|
| Entry-Level Unlimited | $70/mo | $65/mo | $60/mo |
| Premium Unlimited | $80/mo | $75/mo | $85/mo |
| Features (Premium Plan) | |||
| – High-Speed Data Threshold | 50GB | 50GB | Unlimited |
| – Video Streaming Quality | HD | HD | HD |
| – Mobile Hotspot Data | 50GB | 30GB | 40GB |
Plan prices as of September 2022 excluding taxes and fees. Discounts for paperless billing, autopay, and multi-line plans are not reflected.
As you can see, Verizon‘s starting price for a single unlimited line is $70 per month, which is $5-10 higher than comparable plans from AT&T and T-Mobile. The company‘s higher-tier "premium" unlimited plan is also on the expensive side at $80/month, though it does come with a higher data deprioritization threshold and more hotspot data than AT&T. It‘s worth noting that Verizon does offer discounted rates for multiple lines, with a family of four able to get its premium unlimited plan for around $55 per line. But even with those savings, Verizon is consistently one of the priciest options.
So what do you get for that extra cost? In addition to Verizon‘s broader network coverage, the company also includes some valuable perks like free subscriptions to Disney+, Discovery+, and Apple Arcade (for a limited time) with its unlimited plans. Verizon also offers a more robust customer service experience, with 24/7 phone and chat support, more brick-and-mortar stores, and highly rated support according to J.D. Power.
Paying a Premium for Verizon‘s Brand and Legacy
Another factor driving Verizon‘s higher prices is the long-term value of its brand and legacy as one of the pioneers of the cellular industry. The company has been around since the early 1980s (formerly as Bell Atlantic) and was one of the first carriers to launch a nationwide 4G LTE network in 2010. That history has helped establish Verizon as a trusted name in wireless, with a reputation for reliability and performance that justifies a premium price for many consumers.
In fact, Verizon consistently ranks at the top of customer satisfaction surveys among national wireless carriers. In J.D. Power‘s 2022 US Wireless Customer Care Study, Verizon earned the highest score among full-service providers, with particularly high marks for its store and phone support experiences. The company also had the third-lowest customer churn rate (0.86%) among the big three carriers in Q2 2022, indicating that subscribers are generally happy enough to stay with Verizon despite its higher prices.
But Verizon‘s legacy as an incumbent carrier also comes with some additional costs that its competitors don‘t have to bear. The company still maintains a 3G network to support older devices and legacy machine-to-machine (M2M) connections, which requires additional spectrum and infrastructure compared to a pure 4G/5G carrier. Verizon also has a more unionized workforce than rivals, with nearly 35% of its employees represented by the Communication Workers of America (CWA). Those higher labor costs are often cited as a factor in the company‘s premium pricing.
The Real Cost of a "Free" Verizon Phone
Another often-overlooked reason for Verizon‘s higher plan prices is the company‘s heavy promotion of device financing and trade-in deals. If you‘ve ever seen an ad touting a free or deeply discounted iPhone or Samsung Galaxy with a new line, you know what I‘m talking about. Verizon is particularly aggressive with these offers, which can make its plans seem much more affordable than they actually are.
Here‘s how it works: Verizon will offer you a high-end phone at a steep discount (or even "free") if you agree to pay for it in monthly installments over 2-3 years. Those installment payments are separate from your actual wireless service charges, and can add $20-40 per month to your bill depending on the device. Verizon also requires you to stay on an eligible unlimited plan to get the promotional pricing, which is usually one of its more expensive options.
For example, let‘s say you take advantage of a promotion for a "free" iPhone 13 with a new line on Verizon‘s 5G Play More plan. Your monthly bill would break down like this:
- 5G Play More plan (w/ autopay): $80
- iPhone 13 monthly device payment (retail price $799): $22.19
- Taxes and fees (estimated): $5
- Total monthly cost: $107.19
As you can see, the real monthly cost is over $100 once you factor in the device payments and associated plan requirements. And if you decide to cancel service early, you‘ll be on the hook for the remaining balance on the phone. This financing model has become the norm in the US wireless industry, but it‘s a key factor in why Verizon‘s prices seem so high compared to global carriers that don‘t subsidize devices.
The Enterprise and Government Factor
While consumer wireless plans make up the bulk of Verizon‘s business, the company also has a significant presence in the enterprise and government sectors. Verizon is a major federal contractor, providing mobile and network services to various agencies including the Department of Defense. The company also works with numerous state and local governments, as well as large corporations like General Motors and UPS.
These enterprise and government contracts often come with higher security and compliance requirements that drive up Verizon‘s costs. For example, the company may need to maintain dedicated support teams, provide customized billing and reporting, or adhere to strict data retention policies. Verizon also needs to invest in specialized equipment and infrastructure to meet the needs of these customers, such as building out private 5G networks for industrial facilities or government bases.
The revenue from these contracts helps support Verizon‘s consumer business and network buildout, but it also means the company has a higher overall cost structure than a pure-play consumer wireless provider. And while enterprise and government customers are willing to pay a premium for Verizon‘s services, those higher costs ultimately get passed down to consumers in the form of pricier plans.
The Urban-Rural Divide in Verizon‘s Pricing
Finally, it‘s worth noting that Verizon‘s pricing can vary significantly depending on where you live. The company tends to charge higher prices in urban areas where it faces more competition from other carriers and needs to recoup its network investments more quickly. In rural areas, Verizon may offer more discounts or promotional pricing to attract customers and justify its buildout costs.
This urban-rural divide is a common pricing strategy in the telecom industry, but it‘s particularly pronounced with Verizon given its focus on nationwide coverage. The company has invested heavily in reaching remote and underserved areas with its 4G LTE and 5G networks, often with the help of government subsidies like the FCC‘s Rural Digital Opportunity Fund. But providing service in these regions is inherently more expensive due to the cost of infrastructure and the lower population density.
As a result, some rural customers may actually pay less for Verizon service than their urban counterparts, even though the network quality and speeds may be lower. It‘s a complex pricing dynamic that reflects the economic realities of building and maintaining a truly nationwide wireless network.
Is Verizon Worth the Premium for You?
So after all this analysis, the big question remains: is Verizon worth the extra cost? As with most consumer decisions, the answer depends on your specific needs and priorities.
If you‘re someone who travels frequently or lives in a rural area, Verizon‘s superior coverage and reliability may be worth paying a premium for. The peace of mind of knowing you‘ll have a signal just about anywhere can be invaluable. And if you‘re a heavy data user who streams a lot of video or regularly works on the go, Verizon‘s higher data allowances and performance could justify the added expense.
On the other hand, if you‘re a more price-sensitive consumer who mainly uses your phone for basic tasks like texting and web browsing, Verizon‘s plans may be overkill. You can often get comparable service for a lower monthly cost from discount carriers like Mint Mobile or Visible, which use the same networks as the big three providers. And if you‘re willing to sacrifice a bit of speed and coverage, you may be able to save even more by opting for a regional carrier or prepaid plan.
Ultimately, the key is to carefully evaluate your usage patterns and budget to determine the right wireless plan for you. Verizon‘s premium pricing may be justified for some consumers, but it‘s certainly not the best option for everyone. And with the US wireless market becoming increasingly competitive, it‘s worth regularly shopping around to make sure you‘re getting the best possible deal on your service.
