AT&T Kills Unlimited Data

In anticipation of the launch of the new iPhone AT&T has killed unlimited data plans. Under the guise of making data more affordable to more people, the company is introducing new plans and pricing:

With the new wireless data plans, pricing for a smartphone voice and data bundle now starts at just $54.99 per month for an individual plan, or $24.99 per month for an additional line on a FamilyTalk plan, $15 per month less than the price of the previous entry level bundle.

There are two plans, plus a tethering plan:

  • DataPlus. Provides 200 megabytes (MB) of data -- for just $15 per month . . . If customers exceed 200 MB in a monthly billing cycle, they will receive an additional 200 MB of data usage for $15 for use in the cycle.  Currently, 65 percent of AT&T smartphone customers use less than 200 MB of data per month on average.
  • DataPro. Provides 2 gigabytes (GB) of data – for $25 per month . . . Should a customer exceed 2 GB during a billing cycle, they will receive an additional 1 GB of data for $10 for use in the cycle.  Currently, 98 percent of AT&T smartphone customers use less than 2 GB of data a month on average.
  • Tethering. Smartphone customers – including iPhone customers – who choose the DataPro plan have the option to add tethering for an additional $20 per month . . .

The unlimited iPad data plan is going away as well. However existing customers are grandfathered in and may keep that plan if they so choose. 

AT&T's network and reputation have taken a massive hit with heavy data use among iPhone owners. Some of those iPhone owners are among the 2% that exceed 2 GB per month. That group of heavy data users will probably wind up paying more than they currently do under the new scheme. 

Verizon is also eager to move to usage-based pricing but will probably wait for LTE to phase that in. That would've been smart for AT&T but the company is trying to ease pressure on its network right now (and in anticipation of more iPhone buyers) and is seeking to use pricing as a disincentive to its heaviest users.  

While many customers may appreciate the reduced prices on the lower end of data usage, this is a significant step backward for iPhone customers. It's likely to alienate more iPhone customers already frustrated with the carrier's network and, in the end, cause defections.

What consumers generally want is predictable pricing. It will be interesting to see how AT&T's competitors (e.g., Sprint) respond and whether they play up the new complexity of AT&T's pricing and the absence of "all you can eat" data. 

And if the iPhone does move to other carriers, they may try and lure switchers via unlimited data pricing. 

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Update: Apparently if you have an unlimited iPhone plan today you may also hold onto that