Why the iPhone 4 Made AT&T Change Its Pricing

The fourth-generation iPhone has several new features and a new app that clearly shows why AT&T’s 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 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 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.

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