Verizon Case Study: How Share Everything changed everything

Between 2005 and 2015, communication technology underwent a seismic shift. Faster data transfer, the rise of smartphones catalyzed by the iPhone’s 2007 release, and the rollout of LTE technology reshaped how we connect. These innovations not only changed how people communicated but also transformed how carriers structured and monetized their services. This essay focuses on one pivotal case: Verizon’s shift in pricing models.

Old Model: Voice First

Verizon’s earlier pricing model monetized primarily through voice minutes and text messages, with only limited options for data. Families purchased a shared bucket of minutes across lines, but each smartphone required its own separate data package within the plan. Tablets faced an even clumsier setup—customers had to sign separate agreements with their own price tiers, making multi-device connectivity costly and inconvenient. The result was a fragmented structure that discouraged households from adding devices and left Verizon exposed as WiFi offered a far simpler alternative.

The 2012 Pivot

The Share Everything plan introduced by Verizon in 2012 changed all that by streamlining how we contract for cellular services. It replaced device-by-device pricing with a single, shared data pool - an overhaul that made multi-device connectivity far simpler. Verizon also moved beyond smartphones to allowing other internet-enabled devices like tablets and laptops to enroll in the same family plan with smartphone devices and share in the data pool. By no longer requiring separate agreements for each device, the complexity of connecting new devices to the internet was greatly reduced. These changes were associated with an uptick in smartphone and cellular-enabled tablets. Before 2010, most customers relied on carriers only for their phones but by 2014, more than one in five tablets sold were cellular-enabled.

The ease of connecting more devices induced customers to connect their tablets and other devices. This led to an expansion in the number of devices per household under the Verizon umbrella and increased overall market share. Each additional device increased average revenue per user (ARPU) while raising switching costs for families. The more devices and individuals under a household’s plan, the more cumbersome it is to change providers. This gave Verizon greater traction and price stickiness in the market for family plans.

Furthermore, the new structure facilitated more differentiation on data usage. To illustrate, a Family Nationwide Unlimited Talk and Text Plan with four smartphones had a base price of \$250 (\$150 for 2 members plus \$50 for each additional). If three members of the family use only 1GB of data per month and another has more intensive usage of 3GB every month, then they each would each need to add on an unlimited data package for \$30 arriving at a data cost of \$120 and a total plan cost of $370 under Nationwide. See the left side of chart 1 below.

For a family that only requires 6GB of data, Share Everything changes that equation by allowing the family to scale back this data allotment to exactly the amount they need (6GB) in this case. Under Share Everything, each smartphone device pays an enrollment fee of $40 for unlimited voice and text for a base cost under the family plan of \$160 for all four devices, and instead of purchasing a data package for each device, 6GB of data is purchased for the entire plan for \$80 dollars and is shared by all four devices. This amounts to a total plan cost of \$240, \$130 less than under Nationwide, a substantial savings for consumers. See right side of chart 1 below.

Chart 1: Nationwide vs Share Everything Price Structure: for a Family of Four with mixed data usage.

Chart 2: Bar chart of voice/text vs data share of plan cost for family of four that uses only 6GB of data.

For cellular service providers, Verizon paved a new path to monetizing our growing reliance on data as web-based forms of communication became ever more ubiquitous. Savings and greater ease induced more consumers to buy smartphones and also tablets. Then network effects along with growing speeds of communication led to even higher volumes of data usage as new forms of social media and other forms of communication expanded. This shifted Verizon’s core service offering from voice and text to data usage in concert with reshaping how these services are monetized.

Adding tablets to a family plan made connecting to the internet far easier. By adding tablets onto established shared plans for \$10 per month, Verizon eliminated the extra hurdle of having to navigate separate tablet pricing and establishing a new agreement as well as sales costs as mentioned on a Verizon shareholder call introducing the new plan. Inducing more customers to enroll their own phones and those of their family members as well as other devices creates even more reliance on Verizon which makes customers more price sticky and thus inelastic in the long run to avoid the cost of switching for everyone on the phone plan.