In announcing its new unlimited data offer, Verizon said it’s making its LTE network better in several ways to support additional traffic from the service, but analysts are questioning Verizon’s ability to meet capacity demands.

Verizon noted that its LTE network already covers more than 2.4 million square miles and said it has launched LTE Advanced to provide 50% faster peak speeds in more than 471 cities. It also said it can adjust demand in real time with the latest antenna technology coupled with state-of-the-art software platforms, which allow it to deploy new services faster than before, and its small cell deployment is the largest in the nation. It’s also got a lot of fiber.

“We’ve built our network so we can manage all the activity customers undertake. Everything we’ve done is to provide the best experience on the best network—and we’ve built it for the future, not just for today,” said Ronan Dunne, president of Verizon’s wireless division, in announcing the new plan.

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Of course, that leads to all kinds of questions about exactly how Verizon will manage all the activity its customers undertake, especially video. Verizon has long boasted of its network prowess, but competitors like T-Mobile USA are actively pointing out their network upgrades and getting high marks by network measurement firms like OpenSignal. Verizon dismissed OpenSignal’s data as “limited and non-scientific” after a new report said T-Mobile was “within a stone’s throw” of closing the door with the market leader on 4G availability.

Verizon has long argued against the financial value of unlimited data. But the analysts at Wall Street firm Jefferies said they believe Verizon’s shift in strategy was dictated by market conditions, particularly with T-Mobile going all-in on unlimited and Sprint showing some success with aggressive price promotions.

“Historically, VZ has indicated the belief that unlimited data devalues the network and does not provide proper returns,” the Jefferies analysts wrote. “It's possible confidence in the small cell strategy, or plans for further spectrum acquisition, has changed that view.”

UBS analysts said they believe the heightened competitive intensity could drive additional industry consolidation.

“As unlimited goes mainstream, the benefits of zero rating are eliminated (making it less beneficial to own both network and content) while the monetization of data traffic growth becomes increasingly difficult,” they wrote. “It will also likely accelerate consumption of mobile video and add incrementally to wireless substitution of broadband (wireless companies becoming cable companies?).”

They also added that Verizon's move to unlimited data is a positive for spectrum holders, namely Dish Network, and infrastructure providers such as tower and fiber owners, as suppliers of bandwidth. Unlimited data will also make cable MVNOs more challenging, where the wholesale cost per GB becomes cost prohibitive, UBS said.

New Street analyst Jonathan Chaplin said that Verizon "can ill afford faster usage growth" due to its already strained network, and argued that the offering may push Verizon toward a purchase of a company like Charter Communications. However, New Street analysts have been warning about Verizon’s capacity situation for a couple of years.

But demand for increased capacity isn’t likely to come all at once, giving the operator time to pace itself. Rich Karpinski, principal analyst at 451 Research, said Verizon's existing offers, including 5 GB for $50 per month, could slow customer migrations toward unlimited data.

“That said, (Verizon) will indeed face challenges with users consuming higher-bandwidth video, such as 4K, which T-Mobile and Sprint have optimized their networks to largely avoid,” Karpinski told FierceWirelessTech. “Verizon users consuming such video will also find themselves eating up their unlimited data plan more quickly—which should lead them to stay away from higher-encoded video on their own. Overall, the pressure on mobile networks from video will only continue to increase, and all carriers need to deploy more advanced network techniques like carrier aggregation and ultimately more spectrum and fiber. Verizon closing its acquisition of XO recently should prepare it to handle more bandwidth and enable it to further densify its mobile network.”