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Chat with Verizon Wireless CTO Lynch on end of all-you-can-eat pricing

Verizon Wireless imagines that its coming LTE mobile broadband network will run all kinds of devices such as tablet computers, home appliances, automobiles, smart phones and televisions that you may not necessarily get from a Verizon store.

And because so many devices in one household could be connected to its network, the nation’s largest wireless service operator thinks the days of flat-rate plans may be over, according to Verizon chief technology officer Dick Lynch in an interview Thursday at the Consumer Electronics Show. Instead, the company will probably charge a base rate for its users and allow multiple authenticated devices to be attached to its network. Then it will charge by how much bandwidth is used by a provider – a business model known as usage-based pricing.

“The problem we have today with flat-based usage is that you are trying to encourage customers to be efficient in use and applications but you are getting some people who are bandwidth hogs using gigabytes a month and they are paying something like megabytes a month,” Lynch said. “That isn’t long-term sustainable. Why should customers using an average amount of bandwidth be subsidizing bandwidth hogs?”

And with so many consumer electronics tapping into the Web, many of those devices running on Verizon’s network won’t be sold through the company. They will be bought from the Best Buys of the retail world or directly through the Web, similar to what Google announced it would do earlier this week with its new Nexus One phone, Lynch said.

“The whole paradigm of how we sell devices into the public is changing,” Lynch said. “At the same time that we announced LTE, we announced an open development initiative where we encouraged third-party developers to deploy devices on our network.”

Verizon said it has launched LTE markets in Boston and Seattle but they aren’t ready for customers. By the end of the year, the company expects that its LTE high-speed Internet network will cover a population area size of 100 million people. AT&T is on track to also deploy its own LTE network in tandem with Verizon Wireless. Newcomer Clearwire, which is a WiMax ultra high-speed network, has had a head start, covering several major cities and markets already.

By Cecilia Kang  |  January 8, 2010; 7:00 AM ET
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