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Why the iPhone 4 Made AT&T Change Its Pricing

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The fourth-generation iPhone has several new features and a new app that clearly shows why AT&T’s (s T) had to end unlimited data plans for new subscribers now rather than in a year or so when it gets around to deploying its LTE network. The 720p HD camera, the front-facing camera for video chat and applications like Netflix (s nflx) streaming all make video that much more appealing on a mobile device, which if offered to users on an unlimited basis might cause more trouble on AT&T’s network (GigaOM Pro, sub req’d).

Earlier this year I explained how video — especially accessible video — combined with unlimited broadband plans can overwhelm a wireless network. The new iPhone has the potential to not only increase video consumption, thanks to the amped-up screen resolution and Netflix app, but also boost video production thanks to the 720p camera. And while the FaceTime video chat is only available on the Wi-Fi network today, that may eventually change.

So I emailed the folks behind Cisco’s (s csco) Visual Networking Index to get some data points on the two iPhone4 cameras and the Netflix application. For other stuff like web surfing and email, check out AT&T’s online data usage calculator (it’s actually pretty nifty). Cisco came to the following conclusions, which were sent via email:

The front-facing camera resolution is 640×480. At 30 frames per second, with H.264 encoding, this would result in 5 MB per minute video.

The back-facing camera resolution is 1280×780. At 30 fps and H.264 encoding, this would be 12.8 MB per minute video (note that H.264 is generally more efficient at higher bitrates).

Netflix streaming onto an iphone would be about 2.8 MB per minute video.

This means that streaming an hour of Netflix on the 3G network would use up 168 MB — or about 84 percent of the cheaper AT&T data plan. Livestreaming a 5-minute video shot with the back-facing camera requires 64 MB, or 32 percent of the cheaper plan. So clearly, anyone wanting to avail themselves of the video technology on the phone better get the 2GB plan or stay on Wi-Fi. But even with the 2GB plan and $10-per-GB overages a video habit over the 3G network is going to cost you, and possibly make you think twice about that download — or upload. That is exactly what AT&T wants — and why it changed its pricing plans for new subscribers as of yesterday.

16 Responses to “Why the iPhone 4 Made AT&T Change Its Pricing”

  1. Now here is my problem folks.

    I too have unlimited data and an Iphone 4g. The problem I am encountering is that in order to use my phone as a modem which I used to do with my blackberry, I am forced to go to the AT&T website to set up something called Tethering which forces me to sign to their new tired service of 200 mb or 2 gb.

    What is a way around this? Should I give up my new iphone and go back to blackberry that used to work as a modem without any problem or is there any solution to my problem?

  2. The trend is clear and every new iPhone release makes it clearer: the gap between the demand for mobile broadband and what the AT&T network can really deliver keeps growing, and faster than before.
    Eventually we’ll need the phone to be smart enough to automatically find and use Wi-Fi wherever it is available, and let us know in real time how much 3G we have consumed so we can decide to go Wi-Fi-only if we want.

  3. I made some similar conclusions myself the other day. I didn’t have the data points from Cisco obviously, but I did some rough calculations: Consider NewTeeVee’s statement that streaming one Netflix movie a day to your TV via Netflix’s Roku box will use 40GB of data in a month. Let’s assume for a minute that because the iPad has an 11-or-so-inch screen that it only needs to stream at a quality roughly 20% of what is needed for the 50″ plasma in your living room. You’re still looking at around 8GB of data each month from Netflix alone. On AT&T’s new data plans, that’ll cost you $85/month in mobile data. That’s before Pandora. Before email. Before YouTube.

    Ouch. I am not an AT&T customer, but if I already was, there is no chance I would ever lose my grandfathered unlimited plan by choice. Can’t believe I’m quoting this man, but it kind of seems appropriate – In the words of Charlton Heston…Nope, I can’t do it.

    • for the levels of usage you are talking about i am pretty sure that the ‘TOS’ of the ‘unlimited’ plan would get you kicked off anyway.

  4. one thing that i do not understand is why they have not also changed the data card plans. these users already use far more data than iphone users, but no change to those plans.

    also 3g feature phone still get true ‘unlimited’ for $15/month. are they going tho start cracking down on people using the medianet plans in iphones? if they do will it stand up in court?

    i do not have so much problem with AT&T revising ther plans. what i do have a really big problem with is different plans for different phones. if i already own my phone, the make and model of that phone should have nothing to do with my options when it comes to obtaining a SIM card. it should be an any SIM in any phone world.

  5. Those of us with the unlimited iPhone data plan at AT&T will be “grandfathered” if we buy the iPhone 4. At least that’s what the AT&T rep told me today. I’m keeping the unlimited data option until I see just how much data the iPhone 4 is going to use.

    • M.R. in L.A.

      I’ve heard that. But I’m still on a 1st gen phone paying $20/month for unlimited data. Know if I’ll be grandfathered? I was about to upgrade to 3GS right when iPhone4 leaked (so I waited) but at that time I was anticipating a $10/month increase in my pricing. Any guess (or actual info) on how much I’ll pay?

      • Here is what I heard…

        “$15 200MB plan or the $25 2GB plan.

        “Now I have heard that you can be grandfathered into the unlimited plan…but then I hear rumour that if you upgrade you must chose one of the 2 plans…now we pay $30 for the unlimited…so the price is less…and I don’t use 2GB…ever…but the point is that they are taking away the option. They are annoying me just a bit with their control issues!”