Why AT&T would drop unlimited data and add tethering
Let me start by saying that I'm a loyal Apple customer and thus a loyal AT&T customer as well. Short of a Jailbreak, many consumers of Apple's mobile devices are in this same situation.
Today AT&T announced that they are no longer offering unlimited data plans and will instead offer two plans. The lowest-tier, DataPlus, will afford customers 200MB of data per month for a cost of $15. Customers wanting more data per month can purchase a DataPro plan that affords them 2GB of data per month at a cost of $25. Additional gigabytes of data can be purchased for $10 each. Additionally AT&T announced that laptop tethering would be available to DataPro subscribers for an additional $20 per month.
So, why did they do this?
It's simple really. Generally speaking, unlimited data customers don't use more than 2GB a month. In fact, I've used less than 2GB of data on my iPhone in the last year. The limited screen size and functionality prevent users from pulling large amounts of data across the 3G network. This implicit limitation is enough to offer "unlimited" plans. Saying that the plan is unlimited is great for marketing and the limitations of the device keep the amount of data in check.
AT&T responded to customer demand by offering laptop tethering for the iPhone and other data plans. In doing this they enabled full-featured laptops to access their 3G data network. Despite the additional charge of $20 for tethering, the unlimited plans would be a liability. Allowing tethering on an unlimited plan would open their resource-strapped 3G network data-hungry laptops. This would have an impact on performance for all users.
We also must remember that AT&T also offers DSL and Wi-Fi. If I lived alone, I might consider spending $20 a month on tethering in lieu of a home Internet connection. I'm sure many young, on-the-go folks (likely the core demographic for the iPhone) would consider the same scenario. It seems then that unlimited 3G and tethering would be a risk to their wired offerings as well.
Bottom line is that AT&T is continuing to operate like a traditional telecommunications provider. They generally have free-reign in their product offerings and prices because their customers don't have a choice. In many communities they offer the only high-speed Internet service forming a natural monopoly. For those of us who appreciate the experiences that Apple devices provide, we're stuck in that same monopoly.
It's clear to me that Apple's exclusive relationship with AT&T is damaging its beloved end-to-end product experience. If you ask me, it's time for Apple to rethink that relationship.
Comments
Great article, in particular the part on tethering. For a while I was pretty excited about that feature, and would have found it to be of value when I was on the road, instead of paying for hot spots here and there when I needed them. Like you, I have multiple users at home, so that won't fit that need.
See a few articles out there on this now, but thoughts on whether or not tethering will be a huge drain on the iPhone battery? Feel like I'm already charging it enough!
Hey Evan, the article I saw said that if you currently had the "unlimited" plan you can keep it.
So with an estimated 50 million iPhones out there, that's a lot of people who will be keeping their unlimied plans - but if AT&T is right that 96% of users don't use 2GB/month - why not downgrade and save a couple bucks.
I don't see it as that big of a deal. #justmy2cents
Phil,
You're right. 2GB is plenty, unless you want to tether. I'd love to keep my unlimited plan and probably will. But if you want tethering, you have to pay the additional $20 per month charge and pick one of the new limited plans.
Other carriers allow tethering for no additional charge and many with unlimited plans. Why does AT&T care if I tether? Data is data, right? They're putting the bandwidth restrictions and the tethering charges because they barely have the bandwidth to support their current customers' usage.
Tom, As for battery life, it depends. If you're using Bluetooth to tether, you'll probably cause a significant battery drain. If you're using USB the phone will charge up from the laptop while you're working.
Evan,
Thanks for the concise explanation of this new equation. I am breaking down and getting a modbook laptop this week. Now I have to decide, keep my Unlimited iPhone Data for $30 a month, and pick up an air card for the laptop (what's the best deal these days for wireless laptop bliss?) or tether with my iPhone and get the 2GB plan for $45 a month. Hrmmm. What's a guy to do?
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Apparently it is expensive for them to build more towers to keep up with the data. They did not expect to have such a response from smart phones in 2007.
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