Blog Post

AT&T Announces iPhone Tethering, Cuts Price and Quality of 3G Service

It’s easy to make a claim that AT&T (s att) 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 (s vz) and Sprint’s (s 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 (s rimm) 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?

92 Responses to “AT&T Announces iPhone Tethering, Cuts Price and Quality of 3G Service”

  1. Stefan

    I’d bet a lot of data analysis was happening at ATT to come up w/ these numbers… And I’d bet a huge percentage of people have been using 210MB, and another huge percentage using 2.1GB…

  2. Peter

    Folks I beg you…do you own research. The author of this is obviously biased and has left out a lot of important info. First of all anyone currently on the unlimited plan will be able to keep it…that goes for iPad users as well. Second of all 98% of current users of AT&T use less than 2GB of data, so check your data usage on your bill, I think most of you will be surprised that you may be able to save money. LOOK IT UP!! Likewise, 3% of current users use 40% of AT&T’s capacity…I seriously doubt this will change anything.

    My wife and I currently pay $60/month for our data plans with our two iPhones. I use under 2Gb and she uses less than 200Mb…that is going to save us $20/mo.

    Don’t hold your breath for the iPhone to go to Verizon…and don’t think that when it does it’ll be light years ahead. Every major telephone company will and are encountering the same issues. Everyone wants something for nothing. I want all the data usage in the world and I want it for free and I want to use it on all internet capable devices…please. If it means that much to you then sorry, you’re gonna have to pay for it. If you’re streaming videos over a 3G network…GET A LIFE!!

    Nice attempt of the author to try to smear what appears to me as a legit change in policy.

    • Adam Jackson

      Hi Peter. I’m always hesitant to respond to people who hide behind the “anon” avatar. Either way, I’d like to explain things a bit more.

      1. When this post was drafted at 2AM, it was the 2nd post on any popular blog regarding the issue. Meaning, the AT&T statement (via their page) regarding existing users being “grandfathered in” was not known to anyone and this was absent from the press release AT&T put out right after midnight.

      2. When writing articles here, I assume that most readers are the power users among peers and thus using features and pushing our devices further than most users. If all 200+ million AT&T subscribers read this blog, I’d certainly account for that in the post but, with readership like that, we’d buy our own island.

      It is important that everyone check their usage. AT&T’s wireless site has a handy graph that shows your phone’s historical data usage that users should observe. Also, the note about existing users remaining on unlimited is accurate but if you want to add tethering, you’ll have to modify to the DataPro plan which has the 2GB limit shared between the phone’s 3G connection and any device it tethers to.

      I intentionally didn’t bring up Verizon as I’m with you and very skeptical about the Verizon rumors. Smearing is not the right word choice. I explained the facts as the press release provided with a tone that would appeal to power users including new iPhone users who may choose to jailbreak their phones for tethering and hit that 2GB limit imposed by the new plans.

      Another piece of news that was just revealed is that AT&T will charge $10 per gigabyte that you go over your limit which is far below the standard (Verizon charges $50 per GB).

      Either way, you make some great points but I wanted to respond a bit w/ more personal details on why I presented the data in this manner.

      Thanks for the comment.

  3. So how do they define new user? My current contract has expired and I plan to get the next version of the iPhone. Will that make me a new user, since I will have to pick up a 2 year contract when I get the phone?

    • Yvette

      $13 billion in profit is meaningless when you include $18 billion in capital spending to upgrade the network, the largest amount of capital spent by any US company (excluding upcoming spending by BP that is)

      • Profit is not the same as revenue. If they had $13 billion in revenue and $18 billion in upgrade expenses, then you’d have a point. $13 billion in profit means they spent $18+ billion and still had $13 billion left to stuff their pockets.

  4. Chris

    This is crap, plain and simple. I predict we’ll see some sort of class action against at least AT&T – only a few weeks and the data plans are changing for the 3G iPad?

    Forget the part about it being “non-contract” – consumers bought these devices (and I was almost one of them) with the expectations based on the plan terms at the time of purchase. This reeks of bait-and-switch.

    I’m not normally a fan of lawyers, but I hope that some of them band together and sink their teeth deeply into AT&T.
    They deserve it.

    I was SO waiting to ditch my Crackberry in a few weeks and also pick up a 3G iPad – those plans are on an indefinite hold right now until all of this shakes out.

  5. At first this pissed me off, then I looked at my data usage and realized that I have never exceeded 200 mb of data in a month. So this will actual save me $15 a month. I just got a 3G iPad so I don’t know what the usage on it will be like. I’ll keep the $30 a month plan going for a couple of months and then reevaluate how much data a month I need. I may end up with both data plans for the price of just the old iPhone data plan price.

  6. Alex Kinnison

    I just looked at my usage (Settings>General>Usage) and in the life of this iPhone (11 months) I’ve uploaded 200 Mbyte and downloaded 1.4 Gbyte. So the lower use plan will work just fine for me. Admittedly, i don’t stream video to this device, but I do download clips from and others.
    Double-check your usage to see if you should be concerned.

  7. Roger

    I have 2 iphones in my home and I almost never exceed the 200MB. I will be very happy with the change. I was not willing to buy my daughter an iPhone due to the plan costs but this change will make it possible.

  8. Dear idiots,

    VERIZON DOES THE SAME THING. They are not going to magically make the iPhone a 10mbps 5ghz unlimited data whizbang device. They have been ripping people off on data for ages now. sigh At least with AT&T I can use data & voice at the same time.

    The only carrier that seems to be more reasonable about data like this is T-Mobile. If you had data, you could tether a Blackberry for free, as it was just using your existing data plan. I did this for a couple of years. Screw Verizon. Apple needs to get the iPhone on T-Mobile. They already do overseas.
    I’m not happy about this. i used 4gb on 3G since I got my iPad, and the reason I got the iPad 3G was because of the unlimited no-contract data plan. Guess that’s screwed now, and if I cancel I’ll get stuck with the 2gb. At LEAST they could have said “Ok, we’re capping it at 5gb like the other carriers.” Jerks.

      • psimac

        He’s right, tho. People are arguing that AT&T is so evil, but their deal is still better than everyone else. That’s pretty idiotic.

        Furthermore, those of you not buying an iPhone or iPad because of this change should note that AT&T announced they would grandfather plans prior to the 7th–even if you’re an existing subscriber and upgrade to the new iPhone. In my dealings with Verizon, they’ve never been so generous.

  9. Matthew Frederick

    How does the “reduced quality” argument go? You never explained it. Reduced quantity I can understand, but quality? If anything this will improve quality, reducing usage by data hogs and freeing up space for the rest of us.

    For those complaining about the reduced cap, seriously, have you taken a look at your actual data usage, not just what you perceive your usage must be? Using the 3G all the time, including lots of YouTube video, Pandora streaming, etc., I never go over 2Gb, and rarely over 1Gb.

    And for the guy complaining about no longer being able to stream videos over WiFi, this limit has absolutely nothing to do with WiFi, it’s just 3G data.

  10. What are people seeing as their normal usage? While I’m sure there are extremes, I suspect that many of hours of analysis went into this from AT&T side to see what made sense and monetize it to their average user. My data usage? Less than 200Mb on average for a business phone (but the kids don’t play with it either). Based on my peers, I use the phone at about average levels and seek Wi-Fi when appropriate.

    Am I an anomaly? Are you above or below 200MB? Above 2GB?


    P.S. My AT&T service works for me. It’s not perfect but neither am I and neither is my wife’s carrier which is not AT&T, but she is.

  11. Charles

    I’d be fine with the changes if not for the $20 for tethering. If you’re going to start capping my data, then at least let me use it how I’d like. Or give me rollover data at least.

    To recap:
    $20 Tethering + Unlimited Data = fair.
    Free Tethering + DataPro 2GB @ $25 = fair.
    $20 Tethering + DataPro 2GB @ $25 = I won’t be going to Verizon to save money, I’ll be going out of spite.

  12. wesgay

    I have a 3G iPad on reserve at the Apple Store. I’m likely to cancel it now and just get the WiFi. So much for the big unlimited data plan as a selling point. AT&T is starting to turn into the fun police. Unless the new iPhone will drive me to work and cook me dinner, then I may be switching to a Droid.

  13. In looking at iPhone usage, I believe this makes a lot of sense. For iPad users though, I don’t think it’s very good. Watching streaming video on iPhone is not the best since the screen is tiny. On the other hand, it’s a very nice experience on the iPad. If you’re watching a high-quality video stream at 100KB/s, that’s under 3 hours of video streaming per month. Forget using the iPad for watching video!!!

  14. X-Money

    2GB is low I expected at least 5GB here. Then it’s $10 for every additional 1GB that you use on the New Plan. This is a issue to me from photographers and bloggers who is out in the field and uploading their photos and videos. Remember Google has a 2GB limit on uploading videos to YouTube. With this you hit that quick. I mean what if there’s an event happening I can do it with iPad, so what’s Apple’s take on this. I mean it’s good that iPad is not lock to AT&T we just got to wait on other carriers to support it. What of the iPhone I rather go to Verizon now, so is the next iPhone will be on other carriers because it’s time. I’m done putting money into AT&T’s hands.

    • Peter

      Whoa as me I’m uploading my work on a 3G network… Seriously?? Go to a damn Starbucks and upload your pictures and video via WIFI, it’ll take you far less time. Bad argument from you all around…boo hoo, I can only upload a 2Gb video on Youtube…well first of all you’re gonna get capped at only twice that with all the other carriers. Secondly, who the hell is gonna watch a 2Gb clip on YouTube? What does that equate to….like a 10 hour 640×480 low res movie? Seriously?

    • Adam Jackson

      Hi Peter.

      1. According to Wikiedia, “seven minutes of HDTV video at 19.39 Mbit/s is approximately 1 GB.” YouTube’s 1080P upload actually supports 22 Mbits/s and limits non-producers to upload only 10 minutes of video at a time. Once you upload one 1080p video at 10 minutes in length at 22 Mbits/s, you’re nearly at your 2GB per month limit from AT&T.

      2. I come from a part of the US where the nearest Starbucks is half an hour away but there is still 3G service. There may be 20K AT&T hotspots but a majority of those are in cities and not rural areas where cell service is the preferred way of connecting when not at home.

      3. A photographer may have a valid point when sending dailies to an editor in RAW or TIFF format for review. RAW images from a standard 10 megapixel SLR can be 50 megabytes each so 20 photos would be 1GB of transferred data.

      Your argument isn’t invalid, but please weigh in on the situation of the commenter before completely calling them wrong.

  15. This is going to work out great for me. I just reviewed the last 18 months of data usage, and I’ve never gone over 340MB in a month. The other 3 iPhones on the account have never gone over 125MB. I should save $50 a month with this change.

    If the 4.0 update for iPad in September includes bluetooth tethering to an iPhone, I’ll be over the moon.

    • Patty Kins

      I promise that you’ll never be able to tether to an iPad that easily. Innovation and ease-of-use have NOTHING on business and screwing the consumer at every chance.

  16. 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.

  17. Gregg

    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…

  18. GadgetGav

    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.

  19. 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.

  20. Eleanor

    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. :(

  21. Greg Patterson

    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.

  22. 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.

    • Antonio Quarterman

      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!!!

  23. Suydam

    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.