Tiered Data Pricing Not What Consumers Want

AT&T in the US has moved off unlimited data-plan pricing, in anticipation of iPhone 4 (which has proven enormously popular already). Now Verizon says that it will probably do the same. According to Bloomberg:

Verizon Wireless, the largest U.S. mobile-phone carrier, may follow AT&T Inc. in introducing tiered pricing and eliminating unlimited data plans this year as it moves to its faster fourth-generation network technology.

“We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate,” John Killian, chief financial officer of Verizon Communications Inc., the wireless unit’s parent, said in an interview at Bloomberg’s headquarters in New York today.

By contrast Sprint and T-Mobile, the number three and four US carriers respectively, have not so far indicated they will follow suit. According to the WSJ:

Sprint does not, nor plan to limit speeds, nor change a customer's ability to use any particular application or Internet site . . .

Although Sprint is touting its 4G network as the first in the US, my experience with it on the EVO in Seattle was lackluster-to-disappointing. And, as all the reviews have indicated, it sucks the life out of the battery very quickly. Sprint is unlikely to be able to transition from "value carrier" to high speed network leader. Although later to market with LTE, Verizon will quickly claim that mantle from Sprint. 

Probably through the end of this year AT&T will retain exclusive rights to the iPhone in the US, which is infuriating to me on a personal level. However, after it becomes more broadly available, it will be interesting to see how data-plan pricing is affected. In other words, an iPhone available from multiple networks could well generate competition over pricing -- it hasn't so far in Europe -- or promises of unlimited usage on a Sprint or T-Mobile?

As an aside, T-Mobile is doing an extremely aggressive "free phones" promotion this weekend in the US. We'll see whether the company is able to lure subscribers from other carriers. Probably not. Ultimately T-Mobile is going to need to do something radical to grow in the US (merger, acquisition, etc.).

Consumers want lower costs, which AT&T is promising to most data users with its new pricing. But fundamentally consumers also don't want complexity or uncertainty in their data plans. They want "all you can eat" plans and reasonable rates. But the market, at least at the two major US carriers, seems to be headed in the opposite direction.