Sprint (s S) is increasing the price of its data plan for smartphones by $10 a month, applying a “premium data” add-on charge to all smartphones, not just devices that run on Sprint’s 4G network. The move, which takes effect Jan. 30 for new subscribers, is aimed at helping Sprint continue to offer its unlimited data plans for customers while staying ahead of the explosion in mobile data. But in a larger sense, Sprint is offering customers a trade: the security of never going over your bandwidth cap for $10 more per month.
While Sprint is pushing the value in its unlimited offering, it’s raising prices on all smartphone data plans, which could be unpopular. It won’t affect existing subscribers, however, until they upgrade or activate a new smartphone. Sprint first introduced a premium data charge on 4G devices like the Evo, saying it was necessary so it could offer unlimited data on its 4G network. But now, even users who don’t benefit from 4G will still need to pay the extra $10. Sprint is betting that users will still prize the ability to have unlimited data without worrying about overages and data caps even if it comes at a higher price.
It may also be trying to push people to buy its 4G devices, because what’s the point in getting a 3G device now if you’re going to be charged like a 4G subscriber anyway? The new charge may suggest that Sprint is having trouble keeping up with traffic on its existing 3G network. Sprint acknowledges that it’s experiencing an explosion of data, with mobile data traffic forecast to double each year through 2014. Sprint said smartphone users also consume ten times as much data as feature phone users. By pricing 3G data the same as 4G for smartphone users, Sprint can try to accelerate the migration to 4G, where Sprint and Clearwire have a lot more available spectrum for consumers.
The pricing plan is setting Sprint apart from Verizon (s vz) and AT&T (s t), which have both introduced cheaper plans for light data users. Earlier this year, AT&T scrapped its unlimited data plans and introduced a $25 a month 2GB plan and a 200MB plan for $15 a month. Verizon, which has hinted that flat-rate pricing isn’t sustainable, has maintained its unlimited data plan but has also introduced a $15 a month, 150 MB plan. Sprint is really trying to distinguish itself with true unlimited service (on the 4G network anyway; it’s still capped at 5 GB on the 3G network) in a carrier world increasingly headed toward tiered-data services. But while Sprint’s plan may have been hassle-free before, it also comes off as a little inflexible considering the other options available. For new light data smartphone customers on the Sprint network, there’s no choice but to pay for a lot of data they’ll never use.
It’s probably inevitable that Sprint raised prices on its unlimited data plans, but I wish they would have done it differently. Premium data sounds like people are getting more than what they did before. But for new smartphone users on the 3G network, there’s no real difference; it just costs more. Calling it premium data also suggests that smartphones are more premium products when sales suggest they’re more mainstream every day. Sprint is now poised to be live and die by its unlimited data plans. It may alienate some light 3G users in the short term, but it could also encourage even more heavy data users to migrate to Sprint’s 4G network. If it can move a lot of people up to its unlimited 4G network, the pricing change may pay off, at least until those users start to clog up the network.
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