verizon lowering prices

NEW YORK (Dow Jones)--Verizon Wireless introduced lower wireless pricing plans Friday, a move that's likely to force rival AT&T Inc. (T) to follow and could pressure margins on the carriers' high-end business.

Verizon Wireless, owned by Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD), slashed pricing on some of its contract plans, dropping its nationwide unlimited voice plan to $69.99 a month from $99 and offering a nationwide unlimited voice-and-text plan for $89.99.

The company's nationwide unlimited family plans will be $119.99, and an unlimited family voice-and-text plan will be $149.99. Family plans' base pricing is for two lines.

Verizon also announced new plans in its prepaid segment--a white-hot area of growth in the wireless industry--offering non-contract options at $5 more a month than comparable contract plans. An unlimited voice plan will be $74.99 a month and unlimited voice and text will cost $94.99. The 450- and 900-minute prepaid plans also will be $5 more a month than their corresponding post-paid plans.

The new plans will be available Monday. The new pricing won't affect existing customer contracts, although customers may choose to switch to any of the new plans without penalty or contract extension.

Shares of Verizon fell 0.7% to $31 in premarket trading.

"We expect AT&T to follow quickly," Macquarie analyst Phil Cusick said before the announcement, predicting Verizon would lower prices. He noted that last year, when Verizon moved the plans to $99, AT&T followed suit a few hours later.

Officials from AT&T were unavailable for comment.

It's unlikely Sprint Nextel Corp. (S) or Deutsche Telekom AG's (DT) T-Mobile would respond because their prices are already $20 or more lower, the analyst added.

Cusick said cuts by Verizon Wireless are likely to have an impact on 5% to 10% of the company's higher-paying subscribers, but the loss in revenue could be offset by customers in lower-priced plans moving up, attracted by the better value.

When the $99 plans were announced last year, AT&T and Verizon said only 1% to 2% of subscribers paid more, Cusick noted. "The bigger concern is that [Verizon], fresh off a strong quarter, is choosing to attack AT&T for dominance in the slowing" market for monthly contract plans, he added.

Separately, in an interview last week with MarketWatch, Verizon Communications' Chief Technology Officer Dick Lynch said wireless companies will eventually have to change how they bill customers, charging them for how much "bandwidth" they use to prevent networks from getting clogged up. Lynch said current data plans, which allow unlimited Internet access for a flat monthly fee, encourage overuse of wireless networks, mainly by a small number of "bandwidth hogs," or individuals who send and receive lots of large files.

Yet, in that interview, Lynch said the company had no immediate plans to change how it bills customers.