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Assessing AT&T's new data plans: cheaper but limited--and, finally, with iPhone tethering

AT&T Wireless tore up its data-pricing playbook Wednesday morning, dumping its old unlimited-data rate in favor of two cheaper but limited plans.


Under the new price structure, starting Monday buyers of iPhones and other smartphones will no longer have to pay $30 a month for unlimited data service. Instead, they'll choose between a $15 DataPlus plan that includes 200 megabytes of data a month and a $25 DataPro option with 2 gigabytes of data a month.

Each new service departs from traditional wireless practice by not penalizing overages with steep per-megabyte fees. Instead, DataPlus users will pay an extra $15 for each extra 200 MB (or fraction of that quota) they use in a month, while DataPro customers will pay $10 for each extra gigabyte or fraction thereof.

AT&T says that 65 percent of its smartphone customers "use less than 200 MB of data per month on average," while 98 percent of them average less than 2 GB of data a month.

Those claims may sound implausible to people who can't stop checking their iPhones at every spare moment, but a look at an iPhone's data-usage display--open the Settings app, tap General and then tap Usage--may reveal another reality. When veteran tech reporter and early iPhone adopter Glenn Fleishman--one of the few people to blow past Comcast's 250-gigabyte monthly cable-modem limit--checked his own usage earlier this year, he was surprised to find that he'd only been averaging 270 megabytes a month. I've seen similar reactions from iPhone users on Twitter this morning.

If you own an iPhone, you'll get an extra reward later on when AT&T finally enables the "tethering" option Apple added to the iPhone's software a year ago. Once Apple ships the 4.0 version of the iPhone's operating system sometime this summer, AT&T will let you share an iPhone's Internet connection with a computer for $20 extra--a provision you can apparently switch on or off on a month-by-month basis. (11:42 a.m.: But that $20 doesn't increase your data allowance, which makes the surcharge look like a form of double-charging.)

On the other hand, users of the 3G version of Apple's iPad may not feel so happy about the change. Although they can keep renewing their current service (either $14.99 for 250 MB or $29.99 for unlimited use) as long as they want, after June 7 the $25 Data Pro option will replace the $29.99 unlimited deal. Considering how easy it is to indulge in video and other bandwidth-heavy uses on an iPad, that could be a problem.

The big unknown here is what AT&T's competitors will do next. Wireless carriers have a history of marching in lockstep in terms of basic voice and data pricing. So will others follow AT&T's lead? Or will they instead try to advertise the relative simplicity of their current data plans? Please post your guess--and your own assessment of AT&T's new prices--in the comments.

By Rob Pegoraro  |  June 2, 2010; 10:10 AM ET
Categories:  Mobile , Telecom  
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I'll take the $5 give back from AT&T. I used 500+MB last month after I began streaming audio more. Before that, the average was just barely under the 200MB. Users are likely to find it pretty easy to break that DataPlus plan ceiling.

Think I'll take a pass on tethering, however. It is nice that it's being offered month-by-month.

Now if AT&T would bundle text messaging in, that would be a welcome deal!

Posted by: CafeBeouf | June 2, 2010 11:59 AM | Report abuse

Hmmm, someone I know well is using a grandfathered, Cingular, unlimited $20/month Media Net data plan in an unsubsidized smart phone, so far with no issues. I think that the savings has been about $240 so far so I suppose the original plan is working, but, surprise, surprise, I think this person could make do with the 200MB per month plan. With a WalkingHotSpot application, there has been occasional tethering, but probably not enough to blow through the plan.

This is all food for thought. The catch is the the MediaNet plan includes text and MMS. That makes it a keeper.

Yes, I think VZN will follow, but Sprint will not. I'm not sure about T-Mobile.

Posted by: Arlington4 | June 2, 2010 12:09 PM | Report abuse

Hah... now the metered internet prices I've been advocating for the last year ($1/GB/month for the first 40GB; $0.50/GB for the next 60GB) that everyone was complaining would be too expensive starts to look pretty good, doesn't it.
Yeah, you've got the fastest speeds, but Sprint gives you more than twice as many GB/month tethered as ATT. Wait'll your tethered laptop plus iphone uses 4GB just fetching windows/itunes/quicktime/app updates and you have to pay the $10/GB penalty.

Remember what Clemens said about liars, damned liars and those guys that use statisitics (i.e. 98% _average_ less than 2GB/month... that means 98% stay between 4GB/month and 0GB/month; or as many use 3GB/month as use 1GB/month; et cetera... to get the 2GB/month *average* use).

Posted by: Darr247 | June 2, 2010 12:09 PM | Report abuse

Arlington4 - Sprint already limits their "unlimited" plan to 5GB/month unless you had your contract before they implemented that limit more than a year ago.

Posted by: Darr247 | June 2, 2010 12:19 PM | Report abuse

The real question is when one of the big four carriers will introduce a voice plan that can incorporate texts and data for around $30 to $40. As long as the entry level voice option is $39.99, they will never get my business, I'll stick with a prepaid MVNO, even if they use the AT&T network! You are still looking at $40 + $15 + $5 = $60 for an entry level plan that has some data and $20 texts. Crazy expensive in my opinion.

Posted by: bwparker1 | June 2, 2010 12:52 PM | Report abuse

The real question is when one of the big four carriers will introduce a voice plan that can incorporate texts and data for around $30 to $40. As long as the entry level voice option is $39.99, they will never get my business, I'll stick with a prepaid MVNO, even if they use the AT&T network! You are still looking at $40 + $15 + $5 = $60 for an entry level plan that has some data and 200 texts. Crazy expensive in my opinion.

Posted by: bwparker1 | June 2, 2010 12:55 PM | Report abuse

I like it. As with CafeBeouf I run about 500 MB a month so I would save about $5.

You refer to "buyers of iPhones and other smartphones" but I presume it applies to existing customers also.

Posted by: HoosierFavoriteCommenter | June 2, 2010 1:33 PM | Report abuse

Regarding the tethering fee, one might argue it is double charging. One could argue that it is not, though, by saying that you are paying for a feature you would not otherwise have.

The wireless operators might also say that tethering imposes additional costs on them, even when using the same amount of data per month as a smartphone. Smartphone data flow is bursty and more easily shared among many smartphone users in the coverage area of a cell site. Not many smartphone users are streaming Pandora or YouTube at the same time.

Laptop users, on the other hand, will be more inclined to download large files, stream video on a more-viewable screen, etc. It is a data demand on the base station that is more constant and less bursty, and thus a base station is less able to share among multiple users. That might be considered an additional cost to the operator, as those other users will experience a poorer experience (and possibly go to another wireless provider, cut down on their smartphone data usage, etc.)

In sum, even for the same 2 GB data allocation, tethered data is not as nice as voice or smartphone data.

Posted by: Bob_Dobbs | June 2, 2010 1:51 PM | Report abuse

The 2GB cap and overage chargers on new customer data plans are ridiculous. $5 cheaper? I guess I'll stick with my unlimited plan. I have been with AT&T for years now and have purchased a non-carrier branded smartphone straight from the manufacturer. My husband has an I-Phone, hence the unlimited data plan. My unbranded, unlocked smartphone allows me the freedom of using it as a modem for my laptop through bluetooth, my hubbies I-Phone doesn't allow him to do that. For me, no "AT&T tethering" means no data charges or overages and the speed is surprisingly great. I love it and wouldn't trade it for an I-Phone for anything. The freedom to buy an unlocked phone is one of the main reasons why I'd never switch to another carrier. But seriously, AT&T rate plans are outrageously overpriced.

Posted by: tara-belle | June 2, 2010 3:34 PM | Report abuse

I don't agree with Bob_Dodds - charging for tethering when there is a cap in place is double-charging. It doesn't matter how or to what device the data streams flow, you are still limited by the cap. If they increased the cap with the additional tethering charge, they'd have a better case that you are getting additional value from the charge; right now, the justification appears to be "because we can."

Posted by: bbten | June 3, 2010 11:20 AM | Report abuse

I'll agree that AT&T is not justifying the $20 tethering fee, at least that I can see. I'm saying they could justify it by saying that "When you tether, you seize a larger portion of our infrastructure than you do when receiving the same data over a smartphone. Since other users are precluded from using the system during the time you are tethering, we lose that revenue and have to recover the additional equipment depreciation and operating expenses."

Posted by: Bob_Dobbs | June 3, 2010 7:30 PM | Report abuse

Rural IPAD 3G users are the ones that will be hurt the most by this, there are no WI-FI hotspots out here, and no high speed internet at home either, unless you are willing to be reamed by the Sat ISPs. All the high data rate stuff you city folk will be doing on WI-FI I would have to use that capped 3G for. I was planning to buy a 3G IPad but not now.

Posted by: curt551 | June 4, 2010 4:31 PM | Report abuse

Tethering Charge comments. You can add/drop on a daily as-needed basis, and it would be prorated, which puts it at 67c/day. For this you get simul access to the handset, and the tethered device for data. Also, you get support for this function, which is certain to increase calls for support. Lastly, due to the dual data connection, there would be 2 addressable entities on the IP network. This network functionality requires additional resources. One size fits all is gone. People who use data will pay for the scale of data they use. People who use added functionality, will pay for the added costs to deliver the functionality. As it can be added and dropped on a daily basis, I don't see the problem. If you use it regularly, then it's $20.00/mo. With the AT&T net, you can talk, use the data on the device directly, and keep an active connection to a tethered device. With a Bluetooth connection to the tethered device, you can talk over one bluetooth connection, use the device in your hand for the iPhone apps, and have live data connection to another device. Can your network do that?

Posted by: 4Geo | June 6, 2010 2:08 PM | Report abuse

Arlington4, I am a user of the Cingular unlimited data plan you mentioned (but I also opted to include unlimited messaging). I got this plan when I got a Samsung smartphone years ago and the Cingular (aka Cellular) Video wouldn't work with the required smartphone unlimited data plan. So, the Cingular rep tried the non-smartphone unlimited data plan and the video worked. I haven't changed the plan since; I get unlimited data and messaging for $40/month on my HTC Tilt 2. Crazy, huh? And with AT&T's 3G speeds being superior to the competition (especially Verizon!), I have no intention of switching.

Posted by: se_coupe | June 8, 2010 9:25 AM | Report abuse

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