Is The End Of All-You-Can Eat Data Plans Coming?

AT&T's wireless data growth over a 12 quarter period

AT&T’s change in data plan prices today may mark the beginning of the end for unlimited data plans.

Quite literally, the U.S. might be at a crossroads where demand is reaching supply, and people will have to pay up or simply cut back on their usage to remedy the problem.

While AT&T’s price changes may have caught some off guard, the discussion about reaching bandwidth capacity has been raging from Washington D.C. to all of the major wireless conferences. AT&T (NYSE: T) is not the first to have tweaked their plans, and if you aren’t too picky, there’s definitely still some unlimited options out there.

The big challenge in front of all carriers is simple to explain in terms everyone can understand: Approximately one smartphone equals 30 feature phones on a network, and one netbook or aircard equals 450 feature phones. With the demand for smartphones, data cards, and devices like the iPad soaring, data usage in turn is snowballing exponentially.

First, here’s an overview of what AT&T announced today. It has drastically lowered the price from $30 a month to more reasonable rates of $15 to $25 a month. While those prices sound intriguing, they cap usage at 200 MB and 2GB, respectively. What’s worse is that subscribers will have to pay stiff “overage fees” if they exceed those limits.

For example, if customers exceed 200 MB in a monthly billing cycle, they will receive twice as much data for twice the cost. If those on the $25 plan exceed 2GB, they’ll receive one more GB for $20. Anyone on the boarder, will clearly have to opt for the bigger plan. Anyone that is currently paying the $30 unlimited plan has the option to stick with that. For an additional $20 a month, users can use their smartphones to connect their laptops to the internet. Currently, AT&T says 98 percent of smartphones on its network uses less than 2 GB of data a month on average.

Voice and data plans are always in flux, and it’s simply mind-boggling to figure out which carrier has the best deal: It comes down to how many minutes you talk a month and how much data you consume. For every carrier that’s becoming a little more vigilant, you can find one a little more desperate for your dollars. Top carriers like AT&T and Verizon don’t fit that profile. But Sprint’s Virgin Mobile (NYSE: VM) prepaid brand does. At the low end, it charges $25 for unlimited messaging, email, data and web with 300 minutes a month. For $40, you get 1,200 minutes, and for $60, you get unlimited calling. Or, add $10 for any BlackBerry plan. You’ll be responsible for buying the phone at full price.

Even Sprint’s new EVO 4G phone is a good lesson in point: It will cost $110 a month if you want all the bells and whistles, which includes unlimited voice and data on the 3G network and 4G network, and the ability to connect up to eight Wi-Fi devices, such as laptops, gaming devices and digital cameras to the phone. Compare that to AT&T, which will charge $40 for the minimum amount of voice, and $45 for 2GB of data and tethering for a total of $85 (and that’s with a restricted amount of calling and data use).


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