AT&T Data Plans Get a Major Makeover, iPhone Tethering Coming Soon

By  |  Wednesday, June 2, 2010 at 9:10 am

Verizon Wireless’s Lowell McAdam keeps saying that the wireless industry will move towards “buckets” of data rather than unlimited pricing. AT&T Wireless is proving his point today: The company is going to phase out its current $30-a-month unlimited data for smartphones in favor of new, cheaper pricing plans with monthly caps on data usage and a tethering option (yes, even for iPhones).

Starting next Monday, two new plans will be available, both of which involve base fees which cost less than the current plan and reasonably -priced additional “buckets” of data:

DataPro

  • $25 a month for 2GB
  • Additional 1GB buckets are $10 apiece
  • For new iPad buyers, this plan replaces the current $29.99 unlimited plan
  • AT&T says 98 percent of its customers wouldn’t reach the 2GB cap

DataPlus

  • $15 a month for 200MB
  • Additional 200MB buckets are $15 apiece
  • AT&T says 65 percent of its customers wouldn’t reach the 200MB cap

Both plans include unlimited free WiFi at 20,000 AT&T hotspots. And seeking out these hotspots may be more tempting now, since using them will help you conserve your monthly allotment of 3G data.

Current AT&T customers are grandfathered into their current plans, so they won’t lose their unlimited data–but they can switch to one of the new plans if they want.

The other big news: AT&T is offering a tethering option for $2o a month which will let you use your phone as a wireless modem, sharing your data allowance between handset and laptop. And once iPhone OS 4 arrives this summer, iPhone owners will finally get the tethering that AT&T Wireless’s Ralph De La Vega said was arriving “soon” back in November of 2008.

I’m probably not going to sign up for tethering for my iPhone–I have a Verizon MiFi mobile hotspot, generally use well over 2GB of data a month, and am locked into a contract. But the new data plans will cut my phone bill a bit. In months when I’m all iPhone–I also have a Verizon Droid–I tend to use between 200MB and 500MB of data. That’s more than the DataPlus plan’s 200MB allotment, but far less than DataPro’s 2GB. My logical move will presumably be to switch to DataPro, for a savings of $5 a month or $60 a year. And since I won’t come anywhere near the 2GB cap, I won’t have to be paranoid about keeping tabs on my usage.

Except…

I’m also thinking ahead to the LTE 4G data network which AT&T plans to start rolling out next year. Once truly high-speed wireless is a reality, data-intensive applications like streaming TV and videoconferencing are going to get a lot more exciting. S0 I figure my data usage is only going to go up in the years to come, and opting for a limited data plan now will prevent me from gorging on mobile broadband in the years to come. Which presumably helps to explain why AT&T is moving away from unlimited pricing now even though the new plans will let nearly all customers save $5-$10 a month.

Of course, by the time LTE is available, AT&T may tweak pricing plans further. (Sprint already charges $10 a month extra for 4G data on the EVO 4G, its first WiMax phone.) It’s not a given that refusing to give up the $30/month unlimited plan today guarantees that you won’t need to switch plans sooner or later.

In the end, AT&T’s shift is mildly good news for almost everybody in the short term, but the long-term message is the same one that Verizon’s McAdam has been harping on: the days of consuming massive amounts of wireless data at a low fixed  price are coming to an end, just when consuming massive amounts of data is about to get interesting.

Your take?

 
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12 Comments For This Post

  1. Josh Says:
    June 2nd, 2010 at 9:36 am

    Your last paragraph sums up my thoughts. While a lot of people are angry, it’s largely because they don’t understand the problem. The amount of data moving on these networks is ballooning and there just isn’t enough spectrum to go around. There must be some way to change consumers’ habits to match availability. Tiered pricing is the most obvious, and least painful, approach to doing this.

    I have no doubt that, as 4G becomes available and the content adapts, that all of the carriers will tweak their pricing structures to stay competitive. Just because the “buckets” are in 200MB or 2GB increments now doesn’t mean they will be that way a year or two from now. Surely the carriers will compete on data price as much as on anything else, so this should help to mitigate bad plans.

  2. Mike Cerm Says:
    June 2nd, 2010 at 10:17 am

    At the new rates, anyone who crosses the 2GB mark will now be paying more than they used to pay for 5GB. I think it’s insane that AT&T, already tied with Verizon for the US’s most-expensive carrier, is actually raising rates drastically for moderate and heavy users. While it’s true that a 2GB cap is fine for most smartphone owners, it’s really not sufficient for people who tether or iPad users.

    If the comments over at Engadget are any indication, this will push a lot of people over to Sprint. Heavy users could expect to see savings of $50/month if they pick up a Sprint Evo (vs. tethering an iPhone on AT&T).

  3. Chris Says:
    June 2nd, 2010 at 10:47 am

    I just spent a few minutes looking at our family’s use of Data. My peak seems to be about 500MB…my wife’s was nearly 600MB last month. Together we seldom use 1GB. I can say, quite safely, that neither of us have exceeded 2GB on our phone, and I would consider myself a pretty heavy user on 3G for texting, checking web sites, and RSS feeds.

    We can’t do “Data Plus” as we’re sure to use 200MB and end up paying at least $30 a month each, but we can go to Data Pro for 2GB a month–saving $10 a month in our house, and $120 a year.

    With the latest release of TextNow (now sends pics), we can even consider canceling our $5 200 message plans and save an additional $10 a month.

    My wife has an iPhone 3G, and it is due for replacement with the next iPhone (later this month). I have a 3GS, and would like a new iPhone…

    But if you get the new phone, do you have to change your plan, even if you were an existing customer?

  4. John Baxter Says:
    June 2nd, 2010 at 11:20 am

    Happy that I haven’t yet ordered an iPad (soon). Will think about waht this means. I wasn’t planning on doing a lot of 3G streaming.

    I’m OK on the phone, although I might switch down. Have to look at data usage to see.

  5. Bill Grant Says:
    June 2nd, 2010 at 12:05 pm

    I’m less concerned with the immediate impact, but what it means for the future of data plans. I like to use my devices without worrying about going over prescribed limits.

    Now I could get on-board with the current setup if I was confident that the 2GB (98% of users) continues to slide up as usage increases. In other words if 98% of users start to use 3GB, up the limit swiftly. But I don’t have confidence that will happen.

  6. Schnack Says:
    June 2nd, 2010 at 1:09 pm

    This is an ATTrifecta hitting three birds with one stone – bill shock, revenue shock, and (clincher) regulatory shock. Shocking.

    Having gotten that out of the way, the big squeeze between capacity, competition and costs (can I throw the FCC’s haranguing & pitchfork-waving) requires moves like this. While technologies are doing wonders for bandwidth and resource management, bandwidth isn’t free. Attempts to transparently price valued services are the way to go — although where the price points end up, who’s to say.

  7. Randy Says:
    June 2nd, 2010 at 1:33 pm

    The problem isn’t spectrum, it’s the lousy backhaul they all have in place. 4G isn’t a standard, it’s a marketing term and what Sprint is calling 4G is really faster 3G. LTE will only be great if they upgrade the backhaul systems. Carriers have a history of spending tax dollars to build out infrastructure meaning fast pipes but slow back room engines. That’s why they have their hand out for more spectrum again.

    The new pricing looks good on paper but flash forward a year when more sites, yes mobile sites, are doing more video. It doesn’t look so great then. This of course follows higher term fees and getting rid of all phones that don’t require a data plan (that last window is now closing).

    Chris- they can ask you to change your plan when they phase out the older offerings, which will be when you upgrade the device or sign up for another 2 year ride.

  8. nmsaini Says:
    June 2nd, 2010 at 2:32 pm

    The point is not that 98% of us will be saving money. The point is that the $ per MB is going up.

    AT&T New plans-
    $15/200MB = 7.5 cents per MB
    $25/2G = 1.25 cents per MB

    Existing plan –
    $30/5G = 0.6 cents per MB

    So per MB cost is 2x on the more expensive plan and 10x on the cheaper plan. That in my opinion is the bigger story.

  9. JEF Says:
    June 2nd, 2010 at 3:26 pm

    Do you think Apple knew about this change in advance? They haven’t updated their webpage.

  10. Strongfist Says:
    June 2nd, 2010 at 11:56 pm

    I use my G1 as the sole internet provider for me and my room mate. Its handy and no matter what my internet charges are a flat $30 rate.

    For all of you who think ATT is doing a good thing (essentially you iPhone users) read this article :

    http://getyourgadgetsgoing.com/2010/06/03/how-att-will-empty-your-pocket/

    it breaks down how ATT is trying to trap you with statistics that mislead and device. Its true that i am an Android user but i hate to see companies take our hard earned money so this isn;t even about the whole Android-iPhone war. This is just be looking after my fellow consumers…so just check out the article the reply to me with thoughts

  11. Stephen Says:
    June 8th, 2010 at 4:51 am

    This was a well designed business plan to change data rates! The AT&T representative
    I spoke with prior to the change had attended Apple classes for their jobs. The rumor’s were that Apple was holding shipment until June 7, 2010 on all 3G iPads. Isn’t it quite coincidental that June 7, 2010, also the rate change deadline? How many did they prevent from activating and therefore prevent from the “grandfathering” into the flat rate unlimited plan?
    I beat them to the punch by ordering two 3GS iphones and acquired two 3G 64GB iPads and activating all of them under the unlimited plan two days prior to the deadline 6/7/10. The phones can be swapped out for new ones with thirty days of purchase.
    I obviously paid a premium for available stock (on the iPad’s) but will get a larger return in data plan savings over time.
    The release of video calls as well as introduction of Netflix to these devices will obviously increase consumers data consumption. AT&T is all too aware of this as well as consumer habits are on the increase as the technology becomes easier to use as with update 4.0. Steve Jobs has said recently that the IPad will replace the laptop and he’s right on track. AT&T is just hedging an obvious bet that when consumption increases they’ll get higher returns on they’re data plans. People will consume and adapt to the cost’s just like cable and satellite television for their personal entertainment.

  12. Josh Says:
    June 10th, 2010 at 10:16 am

    The rates on ATT website are much higher now than this article states, fyi, ATT sucks.

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