Say Goodbye to Unlimited Smartphone Data Plans: Verizon to Fall Soon

Unlimited data plans are currently used by Verizon, Sprint, and T-Mobile. When you buy a smartphone, you have two plans, voice and data, and at the moment (on those networks), only the former is variable. Data plans are unlimited, usually cost around $30 per month. Use all the data you want! Stream movies, download music, send a billion emails! It's all included!

Not anymore. Verizon's CFO noted in an interview that "We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate." (He didn't announce any other details, like pricing or date of the chage.) Bummer, right? But are we really getting screwed?

Tiered data plans are inevitable, really. Technological advances, as well as the need to keep pace with competitors, means wireless carriers are constantly building and improving their high-speed data networks. All four of the major carriers are working full-steam ahead on next-gen networks (though only Sprint has a 4G smartphone at the moment, the HTC Evo 4G). That's expensive, and it doesn't have an endpoint—those carriers are going to have to keep improving their networks pretty much forever.

On the software and hardware side, smartphones and smartphone OSes are getting more and more capable. You can now stream Netflix on your iPad (or, soon, iPhone)—that's incredibly data-intensive. Android phones can play Flash video. Windows Phone 7 will be able to stream an entire music library over 3G, from computer to phone. The ramped-up needs of smartphone users requires greater bandwidth. Sure, 4G (or, in the case of T-Mobile, "4G-like" HSDPA+) will be faster. But we'll also be using more data. And more people will be using more data.

The thing is, not every smartphone user is the same. Someone who's given a BlackBerry for work might simply use the device for email—a very low level of data use. But a media fiend might stream three movies a day on an iPad, in between downloading music and apps. Is the BlackBerry user getting ripped off, paying $30 a month for unlimited data he'll never really use? Is the iPad user getting a ridiculously good deal, using several GBs per month in bandwidth?

So tiered data plans aren't inherently unfair. There are even ways in which they'll work out cheaper for some users. AT&T's tiered plans include a low-level tier that's half the price of the old unlimited model. That BlackBerry user can just cut his monthly bill in half! On the other hand, if that iPad user used about 5GB of data per month (that is a ridiculous amount of data, I should add, but possible), he'll be paying the $25 plus $10 per extra GB, for a total of $55. That's nearly twice what he was paying before.

So these tiers also mean we have to be more careful. AT&T's plan, the only existing tiered data plan (and so our necessary model), isn't that bad. It alerts you when you're getting near your limit, and gives you the option to purchase another "bucket" of data. But then, AT&T's tethering plan is a laughable ripoff, charging $20 extra per month to use the exact same data on a different device. If you buy AT&T's $25 2GB plan, you've got 2GB to use on your phone. Plug your phone into your computer to tether it, and you've still got the same 2GB—not 2GB more, 2GB total between the two—and yet that costs $20 extra. It doesn't cost AT&T a cent to let you tether, and yet they charge $20 per month.

So tiered plans are inevitable, and can be, though aren't necessarily, a ripoff. Really, we'll all just have to be more careful. It means you've got to read the fine print. It means you've got to pay attention when your carrier says you've almost used your allotted data. It's no longer a free-for-all, but it's also not the death knell of data.

Dan Nosowitz, the author of this post, can be followed on Twitter, corresponded with via email, and stalked in San Francisco (no link for that one—you'll have to do the legwork yourself).

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  • David G

    DATA PLANs should be illegal because they are forcing us to pay for our own privacy so they can store data. They are forcing us to buy cheap phones, or pay 30 dollars a month for 2 years? that's 300% more then the phone cost!!

  • asg749d

    In my opinion, the mobile carriers just want to find a way to monetize the ever increasing traffic on their networks, even though they can compensate that surge with the decrease of voice traffic. I guess, to our detriment, that the carriers learned the lessons from their ISP friends who did not monetize an increase in traffic as it was happening, and instead opted to give every consumer a flat rate on internet access, regardless of the amount of bandwidth used.
    This is an indication of how intense the competition has become to provide broadband access on a mobile spectrum AND how willing we consumers are to buy anything with an Apple or Android OS in it.
    I expect this trend to reach maturity in 2 to 3 years, when all carriers in the US have upgraded their networks to offer reliable, dependable 3G or 4G speeds and consumer begin to have options again. Ceteris Paribus of course.

  • Roderick Gammon

    Tiered data plans aren't unfair, forgive me. But 5gb being a "ridiculous amount of data", in one month? It's only a couple movies (teenager out and about), or a few Skype video chats (traveling parent), or just a handful of blueprints (consultant). A 5gb cap is "today" thinking that will truly constrain our economy tomorrow. Borrow the old "superhighway" metaphor-- sure, charge me for the gas I use, but don't cap how often I can fill the tank. Here's some specifics on a 5gb cap and what you can get:

  • Adam Gerthel

    I'm not sure I agree. From an american perspective perhaps - since that's what you're used to. But from my perspective (living in Sweden) - flat rate 3G and broadband has been a standard for years, and available from all carriers. I'm pretty certain it's the same in most EU countries.