While Sprint (s S) CEO Dan Hesse appeared at Citi’s Entertainment, Media and Telecommunications conference Thursday to talk up Sprint’s new LTE plans, he let slip a change in Sprint’s data policies that could have a big impact on iPhone(s aapl) and other smartphone customers lured in by Sprint’s unlimited plans. Hesse acknowledged that Sprint has been throttling back speeds to the 1 percent heaviest consumers of smartphone data. While technically, the service is still unlimited, the admission leaves egg on Hesse’s face since he’s criticized the competition for adopting similar data restrictions in the past.
Sprint’s data policies still remain the most liberal of any operator’s. AT&T(s T) and Verizon Wireless(s VZ)(s VOD) have stopped offering no-limit plans for new customers, and for subscribers with grandfathered unlimited plans, they start braking bandwidth much sooner than Sprint. Verizon’s speed bumps go into an effect for the top 5 percent of 3G data users when they’re in a congested cell (4G customers are exempt), while AT&T is downgrading speeds for heaviest unlimited data users indiscriminately as soon as they cross the threshold into the top 5 percent. T-Mobile’s policies are a little clearer: its “unlimited” customers buy a bucket gigabytes each month, and while they can exceed the cap without charge, their bandwidth will be cut back.
Sprint may still have the best data deal in town, but it’s no longer unlimited according to Sprint’s own definition. When Sprint’s competitors started implementing caps and restrictions, Hesse took to the airwaves to decry those policies, singling out throttling by name. Those commercials have since stopped and apparently so has Sprint’s attitude toward data use restrictions.
The timing of these new policies aren’t coincidental as Sprint just landed the iPhone. If Sprint enjoys the same success with the iPhone 4S as Verizon and AT&T, then it will find its 3G network suddenly flooded with data traffic from millions of new smartphones. The new throttling policy won’t do much to limit use, but it will keep the most extreme data users from draining bandwidth from the network. That’s bound to infuriate some as many customers likely switched to Sprint precisely because they would face no restrictions, lured in by the promise of streaming video and music to their hearts’ content.
Sprint couldn’t maintain its open networks policies forever – truly unlimited plans just aren’t feasible. The throttling policy is probably just the first step before its forced to do away with unlimited plans altogether – as its done with its data modem service – just as its competitors have.