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Verizon Mobile Hotspot on webOS devices now free, Pre Plus and Pixi Plus fall to $49.99 and $29.99

Whoa, we didn't see this one coming: Verizon just slashed the cost of its 3G Mobile Hotspot feature for the Pre Plus and Pixi Plus all the way down to $, effectively giving you a broadband modem …

Engadget Chris Ziegler

Context & Ripple Effects

Verizon launched the Pre Plus and Pixi Plus as an exclusive on January 25, 2010 (the January exclusivity deal), and within two months it has repriced them again — $49.99 and $29.99, continuing the sub-$99 smartphone pricing posture it adopted across its lineup in August 2009 (that under-$99 price sweep).

The more significant move is the feature giveaway: making 3G Mobile Hotspot free on webOS handsets turns a paid tethering line item — a category Verizon has sold since it first blessed phone-as-modem plans back in 2006 — into a bundled perk that also functions as a substitute for a dedicated MiFi-style hotspot device.

First-order effects

  • Pre Plus and Pixi Plus buyers on Verizon now get 3G Mobile Hotspot at no charge, effectively shipping a broadband modem inside the phone's existing data plan instead of charging a separate tethering fee.
  • At $49.99 and $29.99, both webOS devices drop to impulse-purchase territory on Verizon's network, sharpening their position against comparably priced smartphones on rival carriers.

Second-order effects

  • Rival carriers selling paid tethering and standalone hotspot hardware face pressure to match the free-bundle model or justify the surcharge, since Verizon has made 'free hotspot' a headline differentiator on its cheapest webOS phones.
  • Palm gains a sharper value pitch for its exclusive US carrier partner, but the deeper subsidy raises the bar for what Verizon will expect in exchange for shelf space and marketing on future devices.

Third-order effects

  • If hotspot functionality migrates from paid add-on to bundled standard, the per-feature fee structure carriers have attached to phone-as-modem service since the mid-2000s erodes, pushing carriers toward competing on the underlying data plan itself rather than on access features layered on top.
  • Free tethering on subsidized hardware accelerates the shift where the phone, not a dedicated dongle or hotspot box, becomes the default mobile broadband endpoint for consumers.

The trend: US carriers are converting paid tethering from a premium add-on into a bundled differentiator, using device subsidies and feature giveaways to compete for data-plan subscribers.