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Summary:

It’s easy to make a claim that AT&T is effectively cutting the quality of its 3G service, but that’s the gist of what it announced last night via a press release. On June 7, tethering for iPhone will be available, but the news isn’t all good.

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It’s easy to make a claim that AT&T is effectively cutting the quality of its 3G service, but that’s the gist of what it announced last night via a press release. The timing of this release is odd as it conveniently came a couple of hours after Steve Jobs stood by them at Wall Street Journal’s D8 conference in Southern California. When asked about Apple’s relationship with AT&T, Steve Jobs said things are, “pretty good actually” and that the wireless provider is “handling way more data traffic than all of their other competitors combined.” Steve may be right as he followed up with an assurance that the AT&T network would improve by the end of the summer.

Shortly after journalists had their chance to weigh in on the interview, AT&T announced changes to its 3G data plans. Press releases are generally pretty dry so I’m going to lay out exactly what happened and how AT&T managed to time things perfectly to fit its needs and not the needs of its customer base.

First, let’s point out that on June 7, tethering for iPhone will be available, which is the same day Steve Jobs takes the stage at WWDC. It’s a breath of fresh air that iPhone users in the U.S. will finally be able to have tethering via an official means…only 9 months late. Of course, AT&T wasn’t just going to give us tethering for free and without limitations, since AT&T’s data network is already strained with millions of iPhones and other data-hungry smartphones.

In order to add tethering to your iPhone, you have to switch to the new data plans, specifically, the DataPro plan. Before this change, iPhone users on AT&T would pick a voice plan plus a data plan that was $30 a month and that included unlimited data and tiered SMS plans. Voice and SMS prices remain unchanged but AT&T is going to drop the term “unlimited” from its data plan offerings and let users pick between two plans.

  • DataPlus: Includes 200MB of data per month for $15.
  • DataPro: Includes 2GB of data per month for $25. Add $20 if you want tethering.

AT&T’s angle is that its most expensive data plan is now $5 less which is good for consumers but the fine print is that the previously unlimited plan is now a 2GB per month plan. To be fair to all wireless carriers, unlimited was a term that should have been retired long ago. Verizon and Sprint’s unlimited plans are roughly capped at 5GB even though it’s not a set in stone number. AT&T’s was rumored to be around the same cap per month. Assuming 5GB is the average data cap for U.S. carriers, prior to June 7, iPhone users on AT&T were paying $6 per gigabyte each month and now they’re paying $12.50 per gigabyte, so AT&T’s spin of making wireless data cheaper for the general public is a stretch at best.

I’ve written about AT&T before and received phone calls from corporate communications with their spin and I assume they’ll tell me that a majority of users never use more than 2GB of data so this plan is more accessible for the general public and will save the average DataPro user $60 per year over the current plan and casual data users on the DataPlus plan will save $180 per year. That’s great, but what about the users like me who would like to use their phone as Steve Jobs intended? The iPhone is one third “Internet Communicator” according to Steve’s 2007 Macworld Keynote and I’d like to be able to use it that way. Well, AT&T has an answer to that as well.

It’s promoting a free addition to all AT&T users on the DataPlus or DataPro data plans which is unlimited access to any of AT&T’s 20,000 Wi-Fi hotspots throughout the U.S. This is a perk that AT&T has given away to iPhone users for quite a while now, so if you call up complaining about hitting the 2GB limit, they’ll simply direct you to the nearest Starbucks as a solution for your mobile Internet needs.

Tethering is only available to DataPro subscribers at an additional $20 a month. This is in line with what other carriers such as Verizon are charging for tethering on devices such as RIM’s Blackberry. AT&T notes that this won’t be available to iPhone owners until iPhone OS 4 ships, “this summer.” It’s unclear if tethering will affect the 2GB per month limit of the plan but I’m confident that AT&T is going to enforce it heavily.

AT&T didn’t forget about Apple’s iPad saying that, “the $25 per month 2GB plan will replace the existing $29.99 unlimited plan.” which effectively kills the deal that Apple announced at the iPad launch that many customers bought into when they purchased the 3G iPad. For legal reasons, any iPad users currently on an unlimited 3G plan at the old price will remain on this plan with no changes to service. In other words, activate your 3G iPad service immediately for unlimited 3G goodness while you still can. Remember, as soon as you cancel the 3G iPad service and decide to start back again (since there’s no contract required), you’ll be on the new $25 a month 2GB plan.

To recap, AT&T is dropping “unlimited” data, doubling the price per gigabyte for 3G customers, offering tethering but charging $20 for it on top of the $25 a month DataPro plan and telling iPad users that unlimited data is no longer an option. Steve Jobs assured us that AT&T service would be improving, but it looks like the wireless carrier has decided to simply cut our data and raise the price in order to do that instead of actually improving their service to fit the needs of the user base.

I’m sympathetic to AT&T’s bandwidth issues but that’s how it is when you’re the carrier of the highest selling and most data hungry smartphone on the market.

What do you think of the new changes?

  1. Ludicrous. I will hit 2GB the first week. I watch movies on my device!

    The iPhone on Verizon cannot get here soon enough. Goodbye AT&T.

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    1. Yeah as if Verizon will be any different, good luck with that.

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      1. word on the street is that it will be at LEAST 1 to 2 more years before the iPhone will be ready for Verizon

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  2. I was planning on getting the new iPhone when it comes out later this month (I don’t have one now) but this just nixed that idea. Guess I’ll be waiting for the iPhone to open up to other telco’s to provide some competition on data plan pricing. 2GB per month is ridiculous.

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    1. Antonio Quarterman Friday, June 11, 2010

      It’s funny you say 2GB is ridiculous. 98% of ATT users never use more than 1GB in a month. 2GB is more than enough. I had every iphone that has come out and have never used more and 500000kb. Which is well under half a GB. And I use it for work so I’m on it all the time. What the point of having “Unlimited” Data if you won’t use it? Don’t let something so stupid keep you from enjoying the fruits of the iphone!!!

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  3. Greg Patterson Wednesday, June 2, 2010

    Again ALL providers have a cap on their data usage. And as an FYI I have Verizon as a work line with tethering and they still cap the plan. In most instances they will let you go past, but this practices is an industry standard and not an AT&T only rule. Try going past 2GB on Verizon and they will ask you to pay a single overage fee. The cost on my work line was an additional $20 a month for the month I went over.

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  4. I just bought a 3G iPad yesterday. It will be going back. The $30. plan was an incentive to pay the extra $$ for that capability. I have an iPhone. Guess I’ll be content with that. & prolly not even get the new one. :(

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    1. Eleanor, it would seem that since you have an iPhone, you can tether for only $20.00 and use the data plan from the iphone. Then you can CHOOSE to enable the 3G interface with the iPad when it makes sense for you to do so.

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      1. cadronpickett Friday, June 11, 2010

        The iPad doesn’t support tethering.

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  5. As a pretty heavy iPhone user, I’m pretty happy with the changes. I doubt many people hit the 2gb limit (besides those who watch movies over wifi. I knew there was a reason my connection got slow sometimes. Why did people expect to be able to do that?). This will save our 2 iPhone house $30/mo and allow tethering if we decide to use it. I’m glad that I won’t be paying as much for data I’m not using.

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  6. I think AT&T is being greedy.

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    1. Gordon Gekko Friday, June 4, 2010

      Greed is Gooooooooood !

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  7. 9 months late? Try 12 months late. Tethering was supported by the rest of the world in iPhone OS3.0 which was released at WWDC 2009, a year ago.
    Shame on Apple for sticking with AT&T, and letting them pull the rug out of the unlimited, contract free iPad data plan after such a short time. It was surely a prime reason to buy a 3G iPad (and a reason I was considering upgrading from WiFi) but now I don’t think I’ll bother.
    Not saying Verizon would be any better, but AT&T are just gouging people for their crappy service.

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    1. Well, 12 months late compared to the rest of the world…but 9 months late based on what AT&T actually said they’d do. There’s a difference.

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  8. I think that this is more of an indication that as of June 7, the iPhone will be opened up to another network. Aside from allowing users to jump ship to get away from ATT, it will in fact allow for competition which will be a good thing. Eventually, I believe that the carriers will try and cut one another’s throats and allow for larger data plans at less money. Thank gawd for capitalism…and a free market…

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  9. So I wonder if the new $15 iPad plan will only be 200MB.

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  10. Bull. Why can’t there be a middle one? my data rates seem to cap at 500mb/month. (mostly because streaming over 3g kills my battery)
    maybe this time they’ll eliminate dropped calls, but probably not.

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