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October 18, 2010

Unlimited 3G Data Plans: The End of an Era Nears

By Mae Kowalke, TMCnet Contributor

All good things must come to an end. That saying is an apt one to use when looking at current trends in the 3G data plan market for mobile devices. Not that long ago, most major wireless carriers in the U.S. offered unlimited data plans. Not any longer.

In a Friday report, Yahoo News technology writer Ben Patterson highlighted the trend away from unlimited data plans, noting that after AT&T (News - Alert) did away with its $30-per-month plan in June (in favor of two capped offerings: $15 per month for 200MB, $25 per month for 2GB), Sprint instituted a new policy, allowing it to temporarily suspend the accounts of roaming laptop customers using an excessive amount of mobile data.

Although Sprint and Verizon (News - Alert) still offer unlimited data for smartphone users, the writing is on the wall: AT&T is leading the pack with tiered data plans and others will soon follow. This really isn’t so surprising; it’s become obvious that data-intensive capabilities of the iPhone (News - Alert) and similar devices are straining the nation’s 3G networks, and also the finances of wireless carriers.

Meanwhile, Patterson noted, T-Mobile (News - Alert) is approaching the problem from a different angle: the carrier recently announced it will “throttle” the speed of 3G Web browsing for customers who exceed 5GB of data use per month.

“As the big carriers roll out more and more flashy but data-hungry smartphones, unlimited smartphone data plans are—in the U.S., at least—becoming the exception rather than the rule,” Patterson pointed out.

Wireless carriers really don’t have much choice about whether or not to cap data usage for their customers, said Vantrix CMO Patrick Lopez (News - Alert), in a June TMCnet report; without these caps, the companies can’t stay profitable.

“As more and more consumers are accessing over the top video, carrier's costs increase dramatically, while their revenue remains stagnate,” Lopez said. “I believe that the industry is facing a challenge that will require drastic adjustment if it wants to remain profitable. The main issue is about educating the customer and finding a measurement that is easy to understand and allows the carriers to charge a fair and profitable fee for the usage of their network.”

All this may be necessary, but it’s painful for consumers who rely heavily on their smartphones and find that they are able to reach the data cap easily without breaking a sweat.

“Those who like to stream video over the Netflix iPhone app will quickly burn through their 2GB of monthly data—in which case you'd have to pony up $25 for another 2GB bucket of 3G access,” Patterson said in his report.

Lopez expressed a similar sentiment, noting that most consumers really don’t have a good sense of how quickly they’ll burn through 2GB of data. Video, in particular, will be an issue—especially for iPad and roaming laptop users.

“The problem rises for laptop users who are either using their smartphone for tethering or using dongles or iPad,” Lopez said. “Because the laptop and iPad have a bigger screen, the video transmitted needs to be of higher quality, so these 2GB become roughly equivalent to 1.5 hours of video per month. The majority of users will hit the 2GB cap in the first two or three weeks of their subscription.”

Mae Kowalke is a TMCnet contributor. She is Manager of Stories at Neundorfer, Inc., a cleantech company in Northeast Ohio. She has more than 10 years experience in journalism, marketing and communications, and has a passion for new tech gadgets. She holds a bachelor�s degree in communications from Thomas Edison State College. To read more of her articles, please visit her columnist page. She also blogs for TMCnet here.

Edited by Tammy Wolf

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