Update: Karl Bode and Stacey Higginbotham describe how AT&T made its change in pricing precisely because of the new iPhone's use of more data; users think twice before downloading a video, but get charged an arm and a leg once they do.
Yay, the iPhone 4 is here. But today, instead of thinking about the latest version of the game-changing smartphone, I'm mourning the end of the era of the unlimited data plan.
Last week AT&T announced a new tiered pricing model for data services for Apple's iPhone and iPad devices, which charges users $15 for 200 MB of data and $25 for 2 GB, plus an additional charge for tethering (more on that in a bit). While some think the new model will ultimately be good for consumers, others disagree. David Pogue, while having issues about the tethering, thinks the scheme is a "very delicate balancing act that benefits almost everyone, customers and AT&T alike."
We — like many others — respectfully disagree.
AT&T's argument for its new scheme is that while 98 percent of iPhone users use 2GB or less of data a month, the consumption of the remaining 2 percent is buckling its network. So with the launch of the iPhone 4, the 98 percent of folks who are just average data users can now choose cheaper plans, based on their level of usage, and save some money while they're at it. So what's not to like?
As it turns out, there's more than you'd think. Free Press', Chris Riley has already pointed out that beneath the appearance of lower prices lies the gouging of consumers and the stifling of innovation.
Here's how AT&T's plan really works:
- Punitive overage charges. The "DataPlus" plan offers 200 MB of data for $15 a month. If you go over this amount — easily possible if you stream a lot of music and video — you'll be charged another $15 per additional 200 MB. The "DataPro" plan offers 2GB of data for $25 month, with a $10 charge for each additional GB. Although AT&T will refuse to provide cost information unless legally ordered to do so, $10 per GB is almost certainly more than it costs AT&T to provide the service — and $75 per GB is highway robbery.
And to top it off, Cisco estimates that an average mobile user will consume 7 GB of data by 2014. For that, a "DataPlus" user would be charged $305 a month, and a "DataPro" user would owe $75. AT&T's pricing scheme will punish new smart phone owners just as they're getting up to speed with the mobile Web.
It's likely that Verizon will follow AT&T's lead and introduce its own tiered scheme soon enough (though some suggest that Sprint and T-Mobile, which are both losing subscribers, have bandwidth to spare so they will likely keep their unlimited plans). If Verizon does go that route, metering by the two largest mobile carriers would all but ensure that wireless broadband never becomes a true competitor to wireline broadband, and that broadband users continue to pay Verizon and AT&T double — once for Verizon FiOS or AT&T U-Verse, and again for Verizon or AT&T wireless.
As we continue to see explosive growth and innovation in the world of devices and applications —think how mind-bending the iPhone 4 or the HTC Incredible would have seemed to consumers just a few years ago — the future of wireless broadband service is grim.