Wednesday, June 2, 2010

AT&T's new data plans. Convincing consumers that less is more?

Today ATT announced the end of their $30 unlimited data plan, a major factor that drove adoption of the iPhone. (But with the unintended consequence of overloading their network).
ATT Announces New Lower-Priced Wireless Data Plans to Make Mobile Internet More Affordable to More People
Here's how the new plan breaks down:
  • For $15 per month consumers can get up to 200 megabytes (MB) of data per month.
  • If you have this "DataPlus" plan and exceed 200 MB in a month, you will be automatically charged an additional $15 for another 200 MB.
  • ATT claims that "Currently, 65 percent of ATT smartphone customers use less than 200 MB of data per month on average".
  • For $25 per month, you can buy up to 2 gigabytes (GB) of data per month.
  • If you subscribe to this "DataPro" plan and exceed the 2 GB limit, you will automatically be charged an additional $10 another 1 GB of data.

Earlier this year, Consumer Reports commissioned a study of iPhone users that was conducted by the Validas (see the histogram above). According to the Validas study of more than 1,000 iPhone users, the average data consumption is 273 MBs per month.

Do the math. What will this cost the average iPhone user under the new ATT data plan? Yup.. $30!  So how many customers do you think will go for this new "DataPlus" plan?

On the other hand, you can subscribe to the "DataPro" plan for $25, a $5 per month saving over the current unlimited plan. Validas found that
"another 12 percent of iPhone users use at least 500 MBs per month".
My bet is that the vast majority of iPhone customers will go for the 2GB plan.

But what about the new 4th (c'mon.. it's not 4G wireless) generation iPhone expected to be announced at next week's Apple Worldwide Developers Conference? According to the now infamous Redwood City bar room lost & found incident, it will include a front-side camera for video chat, like the HTC EVO 4G. The big difference here is that the EVO can take advantage of the Clearwire-Sprint WiMAX network, and an unlimited data plan.  Then there's the iPad, which is intended primarily as a media consumption device.

In my report on The Emerging 4G Wireless Landscape, I analyzed the impact that mobile video will have in driving adoption of 4G WiMAX and LTE services. At the CTIA Wireless more than one year ago, Motorola showed the set of projected 2011 mobile user profiles in the slide above.  As you can see, it doesn't take much to exceed 2GB per month.

I think that this latest move by AT&T will serve to further drive users to Verizon, Sprint, and T-Mobile. Android smartphones already exceed the capabilities of even the forthcoming next-generation iPhone. Sprint will continue their WiMAX rollout, Verizon will begin LTE deployment, and T-Mobile will expand on HSPA+.

Do you think it's a coincidence that ATT's new plan goes into effect on June 7, 2010.. the exact same day as the opening of Apple's Developer Conference?   Who says that less is more?

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