The AT&T Shoe Rate Drops

Wayne Rash

Apple's announcement of the iPhone 4th Generation yesterday made it very clear why AT&T announced its new rate structure last week. That new structure, which eliminates any sort of unlimited data plan initially didn't make a lot of sense. Now, it's clear that the reason is because the new iPhone will likely cause users to require significantly more data than they have in the past.

AT&T both annoyed and mystified customers last week when it announced that the new data plans the company would be offering would no longer include an unlimited choice. Instead, there would be two plans, one that provides 200 megabytes of data per month, and the other that provides 2 GB. Both plans cost less than AT&T's previous unlimited data plans. There would be a charge for going over the monthly amount of $10.00 for another gigabyte if you have the Pro version of the plan.

AT&T points out that only 2 percent of its existing users exceed the 2 GB limit, which includes users of all smartphones, including BlackBerries and Android devices. But the iPhone, of course, makes up the vast majority of devices using data plans at AT&T. Now, with the introduction of the iPhone 4, everything is about to change.

Two of the many applications that will be offered on the new iPhone are Netflix and iMovie. Both of these services have the potential for being prodigious users of bandwidth for the iPhone. And, of course, there's always YouTube and other media streaming services, such as Internet radio, network television programs, Hulu and the like. It's pretty clear that the number of users who reach or exceed the 2 GB limit on the Pro data plan will increase.

The Independent did an analysis on just how easy it is to exceed data limited smartphone plans, and pointed out that it's sometimes very difficult to predict how much data you'll actually need.

AT&T, to its credit, also lets you estimate what plan you should consider when you set up your smartphone with its data calculator. But one thing I found when using the data calculator was that fairly modest use, including a couple of movies a month, will bring you very close to the 2 GB limit. The addition of Netflix and iMovie to the iPhone will likely cause many more than the current 2 percent to go over that 2 GB limit. In other words, instead of the $25.00 per month you're paying for the DataPro plan, you'll be paying $35.00 per month for the Pro plan plus the extra gigabyte of data. AT&T hasn't said what will happen if you exceed 3 GB.

On one hand, it's understandable why AT&T would make a defensive move such as limiting as much as it can the amount of data that users can get without penalty. The 3G network is already straining under the demands of the millions of iPhones out there. With its HSPA network only beginning to be built, and its 4G network only a distant dream, the company is already under the gun to provide service that it can't provide everywhere, as iPhone users are already finding.

Knowing that the new iPhone would include a new collection of bandwidth-hungry apps only promised to make things worse. As a result, AT&T did what it could to put its finger into the dike and hope for the best. It was safe to assume that existing iPhone users probably wouldn't change their data usage much, so the company made it so that anyone getting a new iPhone would get the new plan. In addition, it offered incentives to current iPhone users to upgrade to the new phone-and the new plan-as much as six months early so that they could be forced from their existing unlimited plans to the new one.

The general mood of the most loyal iPhone users was pretty clear during Steve Jobs' presentation of the iPhone 4. During the demo, the new iPhone couldn't get a signal while the iPhone 3GS could. Chants of 'Verizon, Verizon,' came from the crowd as Jobs struggled to show the new device. As it happened, the problem was related to Wi-Fi rather than a 3G connection, but the sentiment is clear regardless. Users are already unsatisfied with the 3G arrangement for the iPhone, and with the new limits on AT&T's already strained wireless capabilities, it's only going to get worse.

Add Comment      Leave a comment on this blog post
Jun 8, 2010 11:06 PM Cliff  Enz Cliff Enz  says:
my understanding was that you could keep the old data plan even if you upgraded- is this not true? Reply

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