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Summary:

AT&T today revamped its data offerings for both smartphones and Apple’s iPad 3G with plans that are reduced in price but also limited in monthly data, effective June 7. Some will complain, but the data shows that most smartphone users don’t need unlimited data plans.

AT&T today revamped its data offerings for both smartphones and Apple’s iPad 3G with plans that cost less but also limit monthly data. In other words, as of June 7, the all-you-can-eat pricing for iPhone data plans goes out the window.

Current customers can keep using the plans they already have, but new customers will have to choose either a 200 MB or 2 GB data plan for their smartphone or iPad 3G. Smartphone tethering is an additional fee option for the higher-capacity plan and applies to the iPhone upon Apple’s upcoming release of iPhone OS 4. AT&T will provide software and text message tools to help customers meter their data usage for both. Here’s a rundown of the new monthly plans, both of which include unlimited Wi-Fi at AT&T’s 20,000 hotspots:

  • DataPlus — 200 MB of data for $15, which equates to $75 per GB. Customers that exceed the data cap will pay an additional $15 for another 200 MB.
  • DataPro — 2 GB of data for $25, which works out to $12.50 per GB. Customers will pay $10 for each GB over the cap in a given month.
  • Tethering — $20 per month for smartphones, on a DataPro plan. This option does not provide additional data — it uses the 2 GB provided for in the DataPro plan.

The move comes less than a week after Verizon said it would move to a tiered pricing model for its next-generation LTE network. But AT&T isn’t waiting for a new 4G network to make the pricing changes. Instead, the carrier is adopting the model for its 3G network on June 7  — the exact day the next data-hungry iPhone is expected to launch  —  as a means to help shape the way consumers use its network. Meanwhile, T-Mobile will throttle back bandwidth, so its customers won’t pay overages for additional data. Instead, they will give up the convenience of fast mobile data after racing past the data plan cap.

Customers used to current unlimited smartphone data services are likely to cry foul over the new plans on cost-per-GB basis. But that argument is invalid on an unlimited plan because the per-unit data cost varies on a monthly basis — the price is fixed, but usage is not. And research indicates that customers paying $30 a month for AT&T’s current unlimited smartphone plan will save money and still have their needs met by the new $25 plan for 2 GB of smartphone data.

AT&T says that 65 percent of its smartphone users use 200 MB or less each month on the 3G network and 98 percent use under 2 GB. Is that marketing fluff? Perhaps not. Chetan Sharma, a wireless analyst, estimates that data card users consume on average 2 GB a month, while superphone users consume about 500 MB, so AT&T’s estimates sound accurate. And our own recent poll at jkOnTheRun — a community of die-hard mobile enthusiasts– shows similar results: 80 percent of respondents use 2 GB or less of data on their smartphone, and many of those that exceed the 2 GB threshold do so because they tether their smartphone for data usage. My own monthly data usage on T-Mobile’s network with a Google Nexus One routinely tops out at the same 500 MB that Sharma estimates.

While most smartphone users won’t suffer from AT&T’s new tiered data plans, those who own Apple’s iPad 3G model will. Due to the larger display and affinity for content consumption, iPad users are likely to consume much more data than those on a smartphone — three times more bandwidth-hungry video on the iPad than on other devices, to be exact.

Unfortunately, today’s mobile data networks have a fixed capacity, so carriers have to adopt one or more new models to help manage network use. Otherwise they’d be offering the equivalent of an all-day buffet that runs out of food by lunch.

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  1. Looks like a win for Sprint. Verizon will probably follow ATT’s lead and implement the same pricing structure. Sprint has bucked the trend recently by launching unlimited data plans on its Virgin Mobile brand with a $25 entry point for unlimited data and 300 minutes of voice service. A 3G Blackberry can be used on Virgin for $35 with unlimited data and 300 minutes. The thing to watch for will be what happens when Android devices begin to hit the pre-paid networks. If Walmart’s Straight Talk introduces an Android device with unlimited data and talk at its current $45 price, the game will be over for the major carriers.
    I see this move by ATT as a proactive measure before the launch of the new iphone with its forward facing camera which will increase data use as people will begin skyping indiscriminately. The new plans will keep this data usage in check so that the network won’t become overloaded.

    1. This could also spell disaster for Sprint. Networks charging extra for usage above the norm could help offset their cost for service provided. Sprint’s network could begin to suffer from the cost vs revenue for service provided. Then again the Revenue could out weight the cost. I do hope sprint comes up on top and continues to provide unlimited data.

      1. Sprint can conceivably stick with current plans for a bit thanks to the 4G network — it’s more efficient in terms of how much wireless data is transferred over spectrum. Will be interesting to watch though.

    2. Actually, Verizon’s big-mouth CEO said over a week ago, Verizon will be switching to tiered plans next year. That is when Verizon hopes to have LTE available to their customers. The reason why At&t and Verizon are implementing those types of plans, GSM is poor in America. At&t’s current network is terrible, when Verizon and At&t finally do get LTE, it’s basically a marginal upgrade from HSPA+. Sprint have the benefit of having more spectrum, as well as a 4G network that was primarily designed for data.

  2. A reasonably priced, unlimited data plan was one of the key features touted by Apple and AT&T when the iPad was introduced. To shift gears 2 months later after the sale of 2 million iPads is nothing short of bait and switch.

    1. Guess that innovative mobile broadband plan that Apple worked with AT&T wasn’t all that innovative after all! For the moment, I’m glad I went with a Wi-Fi iPad model. I’m using a Verizon Wireless MiFi (capped at 5GB) and the portable tethering feature of Froyo / Android 2.2 on my Nexus One with T-Mobile – no cap but slower throughput after 5GB.

  3. I guess if you try to see the positive. . . at least for those that don’t need much data they can now get a smartphone without a full data packages. Personally most data for me goes through WiFi as I’m around it 95% of the time so paying for a carrier’s data is a bit of a rip since I don’t use it and I’m sure there are many others out there like me.

    Heck, I’m still waiting for Google Voice + Gizmo5 :) seamlessly integrated into Android. . . I can live with WiFi ;)

    It will be interesting to see what happens when Android hits the prepaid carriers.

    1. it is coming to cricket soon. will be interesting if the phones support wifi

  4. Can someone please explain why I have to pay $20 per month to use my Bluetooth/USB cable/Wifi for tethering? Now that the account is no longer “unlimited” and I still only get a shared 2GB cap why am I paying more???

    That sounds like a RIP OFF to me!

    P.S. Welcome back Kevin, I was starting to think the cows got ya. :-)

    1. I’m faster than the cows – usually. ;)

      Your concern is spot-on, Scotty. The $20 is basically a service fee but doesn’t provide any additional data. That makes no sense to me — if you tether your phone to use data on a bigger screen, you’re more likely to use more data. We’re trying to get a call with AT&T and specifically ask that question as well as others.

      1. Ugh! Data is data is DATA damit!

        While I would prefer if carriers actually offered real unlimited plan (ie actually were unlimited if they claim they are) I have an even bigger issue with the concept of X $ for Y Gb, but only if you consume it in a certain way. Once I buy a certain size of data bucket it is MINE to use as I want. Adding a extra fee for tethering without even given you a larger bucket is basically double billing.

        It makes no difference to the network how you actually consume the data, as usage patterns will smooth out the bumps (if I tether and rip through my monthly allotment in a first week of my billing cycle, I will likely use way less for the rest)… spread that over a huge user base and spikes don’t matter. Watching video on a itty bitty screen moves the same amount of data as watching the same video on a bigger screen.

        This is only going to get worse as smartphones get smarter (solid flash performance, larger screens and faster CPUs) [Dell Streak and HTC Evo come to mind] and more big bandwidth apps/features become available (streaming TV is likely the next big one).

        If Skype or any VoIP app ever really comes to 3G I expect that to be another big one.

        Funny that the carriers were willing to sell you unlimited or large data bucket plans when most people could not actually consume the data. As soon as devices come out that can actually come close to consuming (on average) what they were selling, they pull the plans and jack up the prices. Will be interesting to see what this does to new iPad sales on AT&T.

        Disclaimer: I have a 6 Gb for $30 plan that I don’t plan on giving up… :-)

      2. I hear you on the data thoughts, but this statement isn’t necessarily true: “Watching video on a itty bitty screen moves the same amount of data as watching the same video on a bigger screen.”

        Plenty of video providers optimize for smaller screens, i.e.: why send a 1080p video (2.1 megapixels per frame) when a VGA video works just fine on many smartphones, aside from the newest ones? Lower resolution and compression techniques can greatly vary the amount of data sent. Just a clarification….

      3. If you get them on the phone could you also ask them if they’re removing their hidden limits as well?

        Call me cruel but I like to send links to hot now apps to my iPad 3G buddies and tell them they need to DL them now… only they’re all over 20MB. :-)

        If the connection is no longer “unlimited” why the need for a 20MB restriction? Or restrictions on video et al???

      4. While I agree with the clarification you made, I still stand by the data is data comment. The big picture is how much data is moved by the network.

        Local/peak/burst demand is only an issue when it is being driven by a geographically related event (ie a big conference). Users doing high demand stuff is smoothed both by the size of the network, and the the fact that they will do it at different times.

        Extra billing for tethering is double dipping. Pure and simple. The fact that many/most (?) users do not really understand the issues and think it somewhat magically allows the carriers to get away with such absurd behaviour.

        A very good analogy would be if the gas station charged you $1/gallon for your beater, but demanded $2/gallon for exactly the same gas if you were filling up your SUV or sports sedan. Picture how well that would go over, and yet other than on tech forums, their is very little outcry or thoughts of government intervention.

        I have not seen one study, event a flawed carrier sponsored one, that shows that data consumed via tethering, has a higher network impact than data consumed directly on the device. Also, the same carriers would be delighted to sell you a MiFi or a USB 3G modem for your laptop. Are the /Gb data rates significantly more for those type of plans?

  5. what about video/skype calling? no way the usage stays near this rate. Why not just charge more for phones/devices that use more (like they already do w/ usb type modems for laptops?

  6. While I understand that AT&T will allow current iPad 3G owners to “continue” with their $30/unlimited plan until they choose a different one, in which case they lose it…that really wasn’t what we bought into.

    We bought into a NO CONTRACT plan, with two options-250M or Unlimited, that we could turn off and on at our leisure. How can AT&T change that just one month after the iPad 3G actually shipped? Or are the 250M/Unlimited plans going to be available at our leisure UNLESS we choose the new plans?

    1. exactly. i have been thinking of getting an iPad 3G. the plan was to buy no data most months and just use WiFi, but once or a few times a year when traveling grab the unlimited option and use really heavy as my only internet connection for a couple or few weeks. looks like that option is gone.

      perhaps there can be case for a class action here since this is clearly a bait and switch. i am only going to feel different if AT&T/apple come out and state that all current ipad users are grandfathered in too being able to start and stop service with the old options.

      1. You guys are asking the same question I have: has AT&T converted the 3G iPad from pay-go to contract? Tofel’s post doesn’t address this very import question. In fact, I haven’t found the answer anywhere yet.

      2. OK, I went to the AT&T Facebook page. The good news is that iPaddata will still be pre-pay. The bad news that it’ll will be $25 for 2GB instead of $29.99 for unlimited. Probably not a problem for most customers as AT&T says, though I have friends that easily exceed that on a regular basis. Companies that are or plan to do streaming on the iPad are probably not happy campers right now.

        AT&T offered to grandfather in current iPad owners under the old rates probably to avoid the lawsuits you describe. One interesting note: reports are starting to come in that iPad delivery dates are getting pushed back to after the date the new plans go into effect. I wonder if iPads ordered before but delivered after the changeover will be grandfathered as well?

        My next question, how will this effect AT&T MediaNet rates?

  7. Richard Garrett Wednesday, June 2, 2010

    It would seem much more fair if these new pricing structures included reductions in voice plan charges. Like many, I am using fewer and fewer of my 450 voice minutes allocation on VZW but still paying $39.95 p/mo. During this billing cycle I’ve used only 60 minutes. Thus my real cost for data is about $63 per month. Voice is becoming a cash cow for carriers just like text.

  8. This is a total win for me. I’m currently paying AT&T $30 each for my and my wife’s iPhone data plans, plus another $60 for a 3G card in my laptop. I just checked my data usage, and my wife’s usage is well below 200MB per month, mine is about 500MB per month on average. The 3G card gets used only when I travel, and peaks at about 500MB per month. So I can easily go with the DataPlus for the wife, DataPro+tethering for me. That’s only $60/month total, vs. $120/month today.

  9. anybody ever think of charging a cent/GB fee instead? its the only way to universally compare prices across carriers & accurately pay metered usage.

    it may not be PR friendly way to do things, but its honest.

  10. has anyone seen anything about data only for dongles? are there any changes to those plans?

    1. Kevin C. Tofel tom Wednesday, June 2, 2010

      Dongles / USB sticks / Laptop connect cards aren’t affected by these changes — the new plans are specific to smartphones with the lone exception being the iPad 3G.

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