Rhapsody will now be available as an a la carte service to any Metro smartphone customer regardless of which plan he or she subscribes to. But Metro customers will pay only $5 a month for unlimited music downloads, compared to the $10 Rhapsody typically charges for a single-device subscription.

Previously, MetroPCS included a Rhapsody subscription in its upper-tier data plans, along with other media services like its MetroStudio streaming portal. But the way the tiers worked, to get the music perk, a customer had to be willing to shell out $60 to $70 a month for 5 GB-or-more plan. When MetroPCS retooled its smartphone plans last month, it dropped prices across the board, but it sacrificed those bundled services in the process.

Now customers can get Rhapsody on a $40/500 MB smartphone plan (bringing the price to $45 a month). It’s important to note though that while song downloads are unlimited on Rhapsody, the bandwidth isn’t on Metro’s lower-tier plans. Rhapsody’s app will store music for offline playback, and you can make hefty use of Wi-Fi to keep your phone’s playlists updated. But if you’re out downloading or streaming music in the wild, Metro will start throttle back your speeds when you exceed your cap.

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With more and more customers moving off carriers’ old unlimited data plans to tiered data buckets, streaming any reasonable quantity of video is all but impossible without incurring major overage charges. In its latest update to its iPhone and iPad apps, though, customers can toggle on and off 3G/4G connectivity. It may mean sacrificing Netflix access everywhere, but it could help them avoid rather unpleasant phone bills at the end of the month.

There are still a few unlimited options out there for iPhone users. You can stream to your heart’s content on Sprint’s 3G network. There are still millions of customers grandfathered into Verizon and AT&Ts’ old unlimited plans, but both operators have begun throttling back speeds once customers hit unspecified – and seemingly arbitrary – thresholds, making video streaming all but useless.

What’s more, Verizon is doing everything it can to coax, cajole and boot customers off their unlimited plans this summer. Unless the carriers firm up some kind of revenue sharing pact with Netflix – which Verizon may well be in the process of cementing – it looks like streaming movies is going to be primarily a Wi-Fi affair.

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Sprint CEO Dan Hesse

For the first time in six years, Sprint’s aging Nextel and wireline businesses didn’t overwhelm all positive gains from its primary CDMA business in its quarterly results. Sprint was helped along by 1.8 million iPhone activations, leading to big gains in revenue per subscriber and boosting its total wireless customers to a record 55 million. Still, Sprint is anxious to get rid of the Nextel albatross and spent a good of its fourth quarter financial earnings call detailing its plans to shut down the iDEN network.

Sprint plans to winnow down its total cell sites by 44 percent, from 68,000 towers to 38,000 over the next two years, said Steve Elfman, Sprint president of network operations and wholesale. In 2011, Sprint plans to decommission 9,600 towers by culling cell sites from many of its markets, maintaining its Nextel and Boost Mobile services while shutting down excess capacity. Sprint has started publishing maps on its website identifying which sites are targeted for the scrap heap.

Sprint is simultaneously building its new network architecture, called Network Vision, which will support its current CDMA network and future LTE network across its myriad of spectrum bands. Elfman said Sprint’s infrastructure vendors Ericsson, Alcatel-Lucent and Samsung have already begun work on all 38,000 Vision sites and plans to bring 12,000 of those towers online in 2012. The commercial LTE service will launch by mid-year in 10 markets. Sprint CEO Dan Hesse revealed two more of the 10 today, Kansas City and Baltimore, adding them to the previously announced Atlanta, Dallas, Houston and San Antonio.

The launch of Vision, combined with the shedding of the iDEN network burden, will fundamentally change Sprint’s cost structure for the better, Elfman said. He estimated that the operational and capital investment costs of delivering a gigabyte of data will drop by 50 percent. The cost of delivering a voice minute will also be halved, he said, though it wasn’t clear whether Elfman was talking about those savings coming from its CDMA 2G network or its future implementation of voice over LTE.

If Sprint can really halve its data delivery costs, it may be able to breath a second – or even a third – life into its unlimited data plans. Sprint is the only nationwide operator that hasn’t given in to the pressure of capping or throttling data, but enormous demand for mobile broadband services has to be threatening that strategy. The longer it can keep up with its customers’ unlimited use, the longer it can maintain its key competitive advantage against AT&T and Verizon Wireless.

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Sprint CEO Dan Hesse

Updated. Sprint is walking back comments from CEO Dan Hesse on Thursday about Sprint ‘throttling’ data speeds of its heaviest data users even though they subscribe to unlimited plans. At a Citigroup conference on Thursday, Hesse clearly stated Sprint was reining in bandwidth for its greediest smartphone customers, who Hesse described as abusing the network. But Sprint executive Bill White told Cnet  Hesse was referring only to roaming customers off of Sprint’s primary networks – a policy that has been in place for some time. For any smartphone on Sprint’s 3G or 4G networks, unlimited still means unlimited, White said.

Like all operators, Sprint doesn’t run networks everywhere it offers service. It contracts out with dozens of smaller regional carriers to provide coverage in smaller towns and rural highways, allowing it to focus on cities and major traffic corridors. Those roaming agreements aren’t free, though. Sprint has to pay those operators for every MB its customers consume, leading it to cap data out-of-network at 300 MB per month. Sprint also places caps and use restrictions on its data modem plans, hotspot features in smartphones, and on its Virgin Mobile and Boost Mobile prepaid services. Sprint, however, has kept its smartphone unlimited plans restriction-free because of the competitive advantage they give it over its competitors, all of whom cap or throttle data.

Unlimited staying unlimited has to be a relief to Sprint’s customers, many of whom gravitated to the operator precisely because it’s the only major carrier to offer data plans restriction-free. The question is how long Sprint can maintain that policy. Darrell just wrote about how the iPhone 4S is slurping up two to three times the data of its predecessors. Sprint just landed the iconic device, which is sure to flood to its 3G network with tons of new traffic.

And if Sprint is concerned about data abuse, then it has the worst policy imaginable to combat it. The most heavy-handed smartphone customers who found their data use curtailed or capped by AT&T and Verizon Wireless will likely migrate to Sprint where they face no restrictions on consuming 20, 30 even 100 GB of data a month. The only thing preventing a mass exodus are the limitations of Sprint networks. The iPhone has to cope with Sprint’s slower EV-DO 3G network. Meanwhile, its 4G WiMAX network is fast, but it only covers a third of the country.

Update: Sprint issued a statement on its blog claiming Hesse wasn’t referring to throttling customers when he spoke of managing abusive data users, but rather booting those customers off its network. Here’s the text:

Sprint does not throttle any postpaid phone data users for on-network or off-network usage. Sprint is the only national carrier offering smartphone users truly unlimited data with no throttling, metering or overages while on the Sprint network.

Sprint does have terms and conditions which prohibit certain types of data use that may impair other customers’ usage or harm or interfere with the network. At yesterday’s investor conference, Sprint CEO Dan Hesse was referring to Sprint’s right to terminate service of data abusers who violate Sprint’s terms and conditions. Customers who abuse our network by violating the terms and conditions will be contacted by Sprint in an effort to have the customer change their usage to comply with their subscriber agreement. Customers who do not change their usage and remain in violation of the terms and conditions may be subject to actions reserved by Sprint, including but not limited to termination. Consistent with our advertising, engaging in such uses will not result in throttling for customers on unlimited data-included plans for phones.

Termination is most certainly different from throttling, but in his speech, Hesse said 98 to 99 percent of its customers would be unaffected by such policies. Hopefully, Hesse was just speaking figuratively rather than literally. If Sprint is considering suspending 1 to 2 percent of its subscriber base over their data usage, then it will have a much bigger customer relations nightmare than if it was dealing with mere throttling.

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Sprint’s data policies still remain the most liberal of any operator’s. AT&T and Verizon Wireless have stopped offering no-limit plans for new customers, and for subscribers with grandfathered unlimited plans, they start braking bandwidth much sooner than Sprint. Verizon’s speed bumps go into an effect for the top 5 percent of 3G data users when they’re in a congested cell (4G customers are exempt), while AT&T is downgrading speeds for heaviest unlimited data users indiscriminately as soon as they cross the threshold into the top 5 percent. T-Mobile’s policies are a little clearer: its “unlimited” customers buy a bucket gigabytes each month, and while they can exceed the cap without charge, their bandwidth will be cut back.

Sprint may still have the best data deal in town, but it’s no longer unlimited according to Sprint’s own definition. When Sprint’s competitors started implementing caps and restrictions, Hesse took to the airwaves to decry those policies, singling out throttling by name. Those commercials have since stopped and apparently so has Sprint’s attitude toward data use restrictions.

The timing of these new policies aren’t coincidental as Sprint just landed the iPhone. If Sprint enjoys the same success with the iPhone 4S as Verizon and AT&T, then it will find its 3G network suddenly flooded with data traffic from millions of new smartphones. The new throttling policy won’t do much to limit use, but it will keep the most extreme data users from draining bandwidth from the network. That’s bound to infuriate some as many customers likely switched to Sprint precisely because they would face no restrictions, lured in by the promise of streaming video and music to their hearts’ content.

Sprint couldn’t maintain its open networks policies forever – truly unlimited plans just aren’t feasible. The throttling policy is probably just the first step before its forced to do away with unlimited plans altogether – as its done with its data modem service – just as its competitors have.

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While H2O does sell some phones, one of its biggest attractions is its SIM-only service, allowing customers to take almost any unlocked GSM phone onto its network, including the iPhone and Android devices. Owned by Locus Telecommunications, H2O is a mobile virtual network operator (MVNO) using AT&T’s GSM and high-speed packet access (HSPA) networks, which should have been a good indication unlimited data wasn’t going to work. AT&T was the first operator to rein in unlimited plans, requiring new customers to sign up for a 200 MB or 2 GB smartphone data buckets. If AT&T can’t (or won’t) make unlimited data work, it’s highly unlikely one of its MVNOs could.

H2O would be forced to pay AT&T by the MB, while its customers consumed it at a flat rate. That may not have been a big issue when H2O primarily was selling its customers feature phones, which don’t engage in the data orgies of their smartphone counterparts. But as H2O started selling smartphones like the Palm Pixi Plus on its own, and customers started bringing BlackBerry, Nokia and especially iPhone and Android devices onto the network, data consumption on those plans must have skyrocketed.

Getting hard to find a decent unlimited plan

These days, there’s no such thing as unlimited without an asterisk. T-Mobile throttles back connection speeds if you exceed a set cap in a given month. While both AT&T and Verizon Wireless have grandfathered in their unlimited data customers, both have now implemented ‘soft caps’ on their consumption: If any customer’s gross tonnage of MBs in any given month reaches a point either operator considers excessive, their speeds are throttled back for the remainder of the billing period. Some MVNOs like Republic Wireless try to work around the restrictions on unlimited usage by aggressively using Wi-Fi, but ultimately when customers move back onto the cellular network,, their MBs are counted.

The one big exception is Sprint. The operator claims its unlimited 3G and 4G smartphone plans are one of its biggest competitive differentiators, but Sprint may be forced to change its tune once the data pressures from the new iPhone and its in-suspended-animation 4G build come to bear. There are also a few smaller holdouts. MetroPCS still offers unlimited data plans over its new LTE network, though its smaller line up of devices and the limitations of its networks provide some constraints.

MVNO Simple Mobile, which, like H2O, offers a bring-your-own phone service, also offers a $60 unlimited talk, text and data plan, using T-Mobile’s networks rather than AT&T’s. Simple, however, does have an ingrained advantage. There are relatively few smartphones out there that can tap into the frequency bands of T-Mobile’s HSPA+ network. A customer would have to secure an unlocked version of one those devices if they want to access anything besides T-Mobile’s slow-paced EGDE service. Still, some customer is going to get his or her hands on an unlocked version of one of T-Mobile’s new 42 Mbps Android phones, which would blow that unlimited plan out of the water.

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