Sprint to start limiting unlimited 4G broadband. Smartphones next?

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One of Sprint’s only marketing advantages was the promise of unlimited 4G broadband. But that distinction is fading fast. Friday, the third place carrier announced it was doing away with unlimited 4G mobile broadband for mobile hotspots and devices and was instead instituting three new tiered data plans. And the kicker: there’s no grandfathering of existing unlimited plans.

Smartphones are not included, for now. But it’s a big blow for unlimited data fans and undercuts one of Sprint’s big marketing messages in the market. And it raises questions about whether unlimited in mobile is sustainable if the last leading proponent caves in, even partially.

Under the new tiers, which start in November, users of mobile hotspots, USB modems, tablets and notebooks will pay $45 for 3 GB of combined 3G and 4G, $60 for 5 GB and $90 for 10 GB of combined data. Consumers will pay an additional 5 cents per megabyte over their monthly limit. Previously, users had limits on 3G data but 4G was unlimited.

Sprint was already showing signs that it couldn’t keep up the unlimited game forever. It announced last month that it was doing away with unlimited data for its smartphone hotspot feature and was capping data at 5 GB a month. But to now extend that to mobile hotspot devices and mobile broadband plans for connected devices, it makes you wonder how long before the end of unlimited data comes to smartphones. Unlimited data was a selling point for the Sprint iPhone  and may have been helpful in luring some heavy data users away from other carriers. But if Sprint can pull the rug out from under them like they’re doing here without the promise of grandfathering them in, it could cause a lot of bad feelings.

I’m curious why Sprint is doing this now. I can understand if it was worried about 4G WiMAX data being affected by a hot new phone like the iPhone, but the iPhone 4S only supports 3G. This suggests 4G was already getting congested or offering unlimited data WiMAX plans was becoming too expensive. If that’s the case, it does make me wonder how long Sprint can keep offering unlimited 4G for smartphones.

Stephen Bye, Sprint’s CTO, said at our GigaOM Mobilize conference last month that the carrier was committed to unlimited data plans because it gave the operator a differentiator. But he admitted that there are big costs to keep up with in offering unlimited broadband. “Is there pressure [on cost for unlimited data]? Yeah, and we’ve got to look at how to get the cost structure down to continue to offer this,” said Bye.

We’ll see if this the beginning of the end of Sprint’s unlimited 4G offering, and I have to assume it will extend to smartphones at some point. To make such a turn in the course of less than a month suggests Sprint is having to react to a lot of pressures, both financial and network-related. It’s facing a lot of scrutiny about its plans to launch an LTE network next year and whether it will have enough money to make that happen. With so much going on, I wouldn’t hold my breath for unlimited 4G to stay a reality for Sprint smartphones. It was nice to have unlimited bragging rights, but it may be too expensive to keep that up now.

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