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AT&T Ends Unlimited Data Plans

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Dan Carpenter
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PostPosted: Sat Jun 12, 2010 6:52 pm    Post subject: AT&T Ends Unlimited Data Plans Reply with quote

AT&T Ends Unlimited Data Plans
June 2, 2010

AT&T became the first wireless carrier to end unlimited data plans and implement tiered rate plans for data usage on smartphones and aircards. The new plans begin on June 7th. Currently, all existing voice and text plans will be grandfathered, but users can change to the new plans without a contract extension. Upgrades and contract renewals will require changes to the new rate plans. It is unknown if the other carriers will follow suit.

Although immediately criticized by many, AT&Tís move is driven more out of necessity than a desire to reshape the way the world consumes mobile data. Less than 2% of their smartphone users are data guzzlers Ė 65% use less than 200 MB and 98% use less than 2 GB. Therefore, the majority of the users have been subsidizing the data-crazed minority. AT&Tís goal, and that of the other carriers, will be to charge fees that more accurately reflect a customerís impact on the network.

AT&T has struggled with upgrading their networks and it is common knowledge that they are putting less money [investments as a percentage of its revenues] into building out networks to meet demand. Most criticisms hint at a rationing of their networks. This move may end up saving them billions of dollars in upgrading their network to appease a small community of unprofitable customers.

Unlike in the past, AT&Tís new data pricing plan includes proactive customer notification of their usage upon reaching 65%, 75% and 90% of their data plan. A text and/or email will be sent to the userís phone.

AT&T also has over 20,000 Wireless Hotspots, which is provided free and not charged against their usage allowed by their data plan.

AT&T is unquestionably differentiating between two types of data users; low-end and high-end, and charging significantly different rates for both. Its 200 MB plan costs $15 and going over will cost you $15 for another 200 MB. Its 2 GB plan costs $25 with an additional charge of $10 for each additional gigabyte. The difference is 8 cents a megabyte versus 1 cent a megabyte.

AT&T has also decided to charge $20.00 a month (plus usage) for its tethering plan (which will be available with iPhone OS4). This will certainly increase the demand for Android phones, since tethering is a no charge feature with their sets.

The Free Press Policy Counsel, did bring up a good point in his press release on the new AT&T pricing; ďThis pricing ploy further illustrates why we need the FCC to put an end to the anti-consumer practice of handset exclusivity. For the wireless market to be competitive, consumers must be free to choose both devices and services, and take their devices to any compatible network.Ē It certainly explains why other carriers, who may ultimately have to follow AT&Tís new pricing, have not immediately jumped on the tier-pricing bandwagon.

Stay tuned for AT&Tís revised data pricing before the end of the year.

June 12, 2010
U.K.ís O2, the second most notable iPhone carrier, announced it will follow AT&T and eliminate unlimited data plans as part of its new iPhone 4 pricing. Data plans will be capped at 1GB a month. Just like with AT&T, as the user approaches their limit, a text message will be sent to the user. Additionally, the user will have the option to purchase additional data - 500MB for £5 or 1GB for £10. Texting is still unlimited. However, unlike AT&T (who has an exclusive agreement in the US), O2 has to price competitively or risk loosing subscribers to other iPhone carriers in the U.K.
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