New AT&T Data Plans Make No Sense

AT&T announced new data plans today dramatically reducing the amount of network bandwidth access that AT&T customers will have in the future. Currently, iPhone customers have an unlimited data plan for $30. Under the new plan, you get:

• 200 MB for $15 per month
• 2 GB for $25 per month

iPhone tethering will be available for an additional $20 per month (meaning you can use your iPhone as a wireless modem). Existing iPhone customers can keep their unlimited plans for now, at least until they upgrade their phones I imagine.

What it Means in Practical Terms

I wanted to get a grip on my data usage and what this plan means to me. I went online and studied my bill, but couldn't find actual data usage, so I called AT&T customer service. I was told I used approximately 58 MB (57 and change) last month. I have an unlimited Family texting plan on the phone, so texts (even multimedia ones) don't count toward this total. I use a bunch of Apps including Twitter, Facebook, ESPN and MLB and I don't use a lot of data. I download a couple of Apps and an occassional song or video from iTunes in any given month.

I asked the customer service representative where I would start to run into problems with data usage and without hesitation, she said it involved downloading video. She said she downloads HD video at about 700 MB a pop. With that kind of usage, she would use up her allotted 2GB very quickly.

If you exceed the 2GB threshold, each additional GB will cost you $10. As my colleague, Steven J. Vaughan-Nichols tweeted:

"The new AT&T plan essentially kills the iPad as a high-end video platform."

I'm wondering what's going on inside Apple today, and if they were aware of the data usage changes. I can't imagine they are happy about it. Chances are if I'm worried about data usage, I might be reluctant to download videos from iTunes on my phone. That could have a big impact on Apple's business model.

Stupid Is As Stupid Does

As my friend Bill Swallow Tweeted:

Dear @attnews @shareatt, if #AT&T drops the $30 unlimited data plan, you will lose me as a customer.

I didn't quite understand the implications of this announcement this morning until I looked into it more carefully, but now that I do I'm as unhappy as Swallow. AT&T customers should be mad as hell about this change over because chances are it will lead to frequent overages.

We will hear from AT&T, as we have from Comcast and other network stewards, that these plans cover the vast majority of users, except when they don't. And those people who fall through the cracks could be in for a rude awakening when the monthly bill arrives and they learn that junior has been using the iPad to watch high definition videos. Oops so sorry you have that additional charge (not).

AT&T is trying to find a way to make money. Can't blame them for that, but as Facebook has learned, if customers yell loudly enough (or speak with their wallets by walking away), then they may have no choice but to respond. People buy these devices precisely because they want to watch videos. This is especially true for the iPad. Why not simply continue to offer the option of unlimited usage for those who want it. If you're afraid to be in the networking business because people actually use your network, you might want to consider another line of work.

[Steve Webb]

RE: As my colleague, Steven J. Vaughan-Nichols tweeted:

"The new AT&T plan essentially kills the iPad as a high-end video platform."

Your colleague got it wrong; the new AT&T plan essentially kills 3G as a high-end video delivery channel! That still leaves the iPad with wi-fi for high end video.

AT&T is trying to coerce more users into using 3G economically, and making wi-fi their first choice for video.

One more thing... It should also make Wired Magazine re-think their [cough]Adobe[/cough] iPad edition.

[Techwriter10]

Steve:
I think you're right about that distinction and that AT&T prefers to move the network pressure to WiFi. Also like your point about Wired/Adobe iPad App.

I would prefer to see AT&T actually invest in their networks to deal with the additional pressure the iPhone (and iPad) bring, or have Apple stop using them as an exclusive sales channel.

Thanks for your comment.

Ron

[jameskatt]

COMPARING AT&T'S NEW RATES VERSUS VERIZON'S RATES:

FOR INDIVIDUAL PLANS IN THE UNITED STATES:

VERIZON:

Unlimited Talk = $70 a month
Unlimited Text = $20 a month
25 MB Data = $10 a month <--- STUPID. Almost all users will exceed this.
5 GB Data = $30 a month
Tethering = $30 a month

Data over 5 GB = $0.05 per MB = $50 per GB.

-----

AT&T:

Unlimited Talk = $70 a month
Unlimited Text = $20 a month
200 MB Data = $15 a month <--- covers 68% of iPhone users.
2 GB Data = $25 a month <--- covers 98% of iPhone users.
3 GB Data = $35 a month
Tethering = $20 a month

Data over 5 GB = $0.05 per MB = $50 per GB.

-----

NOTES:

AT&T's rates are very favorable compared to Verizon's rates.

AT&T's Tethering rate is less than Verizon's

For the 98% of users who use less than 2 GB a month, AT&T is $5 a month cheaper than Verizon, saving $60 a year. With tethering, AT&T is $15 a month cheaper than Verizon, saving $180 a year.

Ideally, AT&T should also have a limit of 5 GB a month, like Verizon. This makes it easier to use video conferencing on the new iPhones. After all, AT&T in the 1970s did envision someday having video conferencing on phones. The 5GB limit would still be a good cutoff point for heavy data users.

[Techwriter10]

Nicely done, James, but I have to assume your percentage numbers are coming from AT&T, so I'm not sure you can really trust those numbers. If 98 percent of users are covered by 2 GB, why get rid of unlimited plans at all? What's more, as people use more data-intensive services moving forward, these thresholds will become more of an issue. This will work for AT&T so long as the other cell carriers go along. As soon as someone offers a cheap unlimited data plan (and Sprint or T-Mobile would be smart to do this immediately as competitive differentiator), they are going to have an issue.

And as I say, I can't believe Apple isn't going to go ballistic over this. I certainly think they should be, as should iPhone users.

Thanks again for the excellent comment.

Ron

[blud]

My personal views on this were a little bit mixed at first, I was livid they were getting rid of the unlimited data plans, until I started to do a little more research.

On our Family plan of 5 people, 3 of which with iphones, here is how it breaks down:
2 people use less than 150meg/mo (some months, they jump to 170-180, but never above 190) 1 person (me) uses 1.3gig/mo, with the one month last year I jumped to 2.1gig.

I watch movies on a fairly consistant basis, but apparently I'm always on wifi when I do it. With ATT offering free wifi to smartphone users with any data plan at any of their hotspots (every starbucks, mcdonalds, etc. in dallas) I rarely have a reason to be on the 3g network when I'm not driving in my car. This new plan will save me $35/mo. on our family plan, as 2 of the 3 users can go to the $15 plan, and myself can use the $25 plan, and continue to use our devices like nothing has ever changed.

This is for 'iPhone' use. Once I did the math, I was actually kind of excited about these changes, and see 0 use for 'tethering' in my situation. While this does pose a challenge for iPad users who like to stream netflix or slingbox, noone that I personally know does this at a place they can't sit down and most likely a place that already has wifi, or wifi near by.

Personally, I only have the wifi ipad, then use Clear to get 4G and use a ClearSpot with my car charger to get 4G (up to 10Mbit) connectivity wherever I go, and it's small enough to fit in my pocket, so I just take it with me (it has it's own battery) when I leave the car.

Summery: For me and my family, these are *great* changes, but I think ATT is just trying to get others, like one of my friends, who used 11Gig last month, to watch their 3g usage, and learn to use wifi more.

[blud]

If anything, ATT did a *VERY* bad job of marketing these changes.

[Techwriter10]

Blud,
Oh I'm sure some users will end up with lower monthly bills, but you get what you pay for and the potential for overages is always going to be there. I agree that they did a horrible job of presenting these changes, but I've never been very impressed with them as a company or a service provider. When it comes down to it, they are trying to save themselves from having to invest in more network infrastructure. It seems odd to me that they won't even offer an unlimited option for those like your friend who obviously need it. WiFi is all well and good, but AT&T is in the network business and they shouldn't be worried about people actually using their network.

Thanks for your comments.

Ron