So is AT&T Ripping Off Data Users?

June 3rd, 2010

Just weeks ahead of the expected release of the next generation iPhone, AT&T has decided that they simply can’t afford to give you unlimited data access for $30 a month. Instead, they are setting up a two-tier program that should serve most light and heavy users.

So is this just more evidence of rampant corporate greed, or does AT&T have a point? Well, here’s the deal: The top-of-the-line Data Pro package gives you 2GB of bandwidth for $25. Their PR spin doctors claim that only 2% of their customers abuse that limit, and they are allegedly causing poor network performance for everyone.

The reason, I suppose, is that the worst “abusers” are spending inordinate amounts of their spare time downloading apps, movies and songs through AT&T’s network, thus helping to saturate finite system capacity. The new data program is designed to offer a good deal for the other 98%, and actually save you some money in the process.

The pricing structure, however, doesn’t seem to make much sense. For $15 per month, you get 200MB bandwidth.  That’s only $10 less than the 2GB package. You will be warned if you are getting close to exceeding those limits, and you will then have upgrade options. If you are in danger of consuming more than 2GB, for example, an extra $10 will get you another 1GB, which ought to be sufficient for at least some of those remaining 2% of heavy users and abusers.

Data Pro customers will also be able to set up tethering, which means you can use your iPhone as a 3G broadband modem on, say, your Mac or PC portable, for an additional $20, which actually seems a pretty sensible package when you examine similar deals from other carriers.

You’re not forced to take one of the new pricing schemes. Those of you currently signed up for the $30 unlimited data plan will be “grandfathered,” which means you can keep that plan even if you upgrade to the next generation iPhone. The altered packages are primarily for those who sign up for new contracts, although you can switch if you like.

One quick way to decide whether to make a move is to check your online usage on your AT&T account under the View Past Data Usage category. AT&T will display graphics of the amount of data you consumed for the previous six months, plus the choice of examining the stats for other timeframes.

Now when I checked my account, I noticed that I came close to 200MB on occasion, but rarely, if ever, exceeded that amount. The main reason is that I do most of my Internet heavy lifting while connected to a Wi-Fi network, so I’m not taxing AT&T’s system. If you’re a light user, by all means downgrade to the basic plan. However, considering the slight difference in cost, I would probably switch to Data Pro, assuming I wanted to abandon unlimited. But even though I’ve been going through tremendous financial turmoil in recent months, my iPhone remains an essential business expense.

Right now, AT&T’s main competitor, Verizon Wireless, plans to stick with their unlimited data programs, since it makes for provocative ad copy. But since so few users are being hurt, on the long haul that will probably change.

More to the point, I’m not concerned so much with a more realistic data plan, particularly if it lessens the load on AT&T’s clogged cell towers. The real relief from slow performance and dropped calls, though, will be the promised upgrades to their network architecture. At this week’s AllThingsDigital conference, Steve Jobs said that he expected at least some relief by summer. Before you dismiss any promise made by AT&T, even if that promise is given to the CEO of Apple Inc., I have to tell you that call quality has improved tremendously in the three years I’ve been an AT&T customer.

You see, at one time, there were neighborhoods here in the Phoenix area through which I couldn’t pass without losing most of wireless signal. The installation of new towers and the upgrades to existing equipment have pretty much vanquished the worst ills. These days, dropped calls are a rarity for me, and general system performance is little different from my former wireless provider, Verizon.

However, if you live in New York or San Francisco, you may disagree. Clearly AT&T was caught flat-footed by the success of the iPhone and its tremendous drain on their network. Some suggest that Apple might be to blame, in part, because they weren’t familiar with the tricks of taming their smartphones for maximum connection efficiency without severely consuming network resources. While I suppose that may have been true at one time, Apple does use industry-standard parts for its communications hardware and they’ve surely been able to learn a few secrets from their network partners.

It’s also true that Internet access on the iPhone is so seamless, more and more people are relying on these gadgets for surfing. That’s why AT&T had to look at the data plans a little more realistically.

While I suppose some of you might have reason to complain about being cheated by a greedy wireless carrier, in the real world, you’ll rarely have need to exceed the new limits. Or just keep the plan you have to feel safer.

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15 Responses to “So is AT&T Ripping Off Data Users?”

  1. Randy A says:

    The new AT&T charge for tethering is nothing at all like the Verizon plans. I went to the Verizon store to get a MiFi and the young lady encouraged me to look at the phones that they have that do the mobile hotspot because of their tethering plan.

    I upgraded my home telephone to a Palm Pre. For $30 a month I get unlimited data for the phone itself and 5GB of data for tethering. My month just ended and I was able to view my bill online today. On the phone I used 1.9GB of data and for tethering I used 4.6GB of data. My charge? $30. There was a BlackBerry that does the mobile hotspot thing as well, but i was anxious to try the Pre. Besides that, it was free on my plan and the BlackBerry was $150. She tells me that tethering will work the same way for my Droid when Android 2.2 is released for it, I just have to call to add it to my plan. There is another 5GB for tethering each month with no price increase on that plan.

    My usage won’t be this high every month as I took the thing on a trip and had 4 iPads connected to it an awful lot, but i have a mobile hotspot and my home phone is now no longer a plain old cell phone. I also am saving $30 a month over the cost of a MiFi. The tethering worked perfectly the entire trip and the Verizon network did not disappoint, even in the most remote areas of Illinois and Indiana.

    AT&T’s new tethering price is nothing at all like what Verizon is doing right now. These plans are nothing but a rip off to new users and seal the fate of me ever adding an iPhone to my already over loaded communications arsenal. As Daniel would say, I am freetard as I do love my Droid for all that it does for me but I had decided to enter into an AT&T contract to get an iPhone later in the summer. Not happening now as I will not step up my plans just to beat a June 7th deadline. No iPhone v4 available then.

    Further, I will never add an iPad with 3G to my overloaded cache of Apple toys (tools) because these new AT&T plans also include the iPad, which you failed to mention. It makes no sense at all to me to do this as my plan would be intermittent and I would be unable to keep the $30 5GB plan. 2GB makes absolutely no sense to me at all for this device. I will continue to use my iPad with WiFi and my Verizon tethering plan. Once Android 2.2 hits the street I will have 10GB of data and won’t have to worry about how many Netflix movies I want to watch any more.

  2. Don says:

    I currently have a iPhone 3GS which I love and will get an iPad, but the AT&T asking price is just too much. Options abound. Jailbreak the iPhone for free tethering is one. Tethering to the Pre sounds like a decent compromise. Granted I’d rather just use my iPhone/iPad but not with the current AT&T setup limits. AT&T legit would cost $25×2 for the iPhone and iPad data plans plus $20 for tethering, so for $70 I’d get a total of 4GB data. Going to Verizon and tethering a Pre I’d get unlimited Pre data and 5GB of iPad/iPhone/Laptop tethering data for $30. If things don’t change when my contract is up with AT&T I’ll be taking my $210/month family plan to Verizon.

    • @Don, The fundamental issue here is whether AT&T’s limits are adequate for most users. If they are, the pricing makes sense. If lots of people need more than 2GB bandwidth per month, then it will present a problem. AT&T claims it’s just 2%, but that can be an awfully large group.


  3. Janey says:

    Even though I’m grandfathered in with my 29.99/mo unlimited data iPad plan, I’m angry. Why? A huge part of the initial announcement revolved around the fact that it was a non contract plan and users could cancel it and re-add it as needed. Now we can’t do that because if we do, we’ll only get the 2gb plan. So much for that ‘add it if you need it again’ idea. I use it on Wifi at home but there is no wifi where I work, and I use the iPad mostly at work. ABC shows and Netflix stuff. I watch maybe two TV shows a day. I reset the counters and watched an episode of LOST and was up to 200mb before I knew it. Basically on 2gb I could watch 10 episodes of LOST a month and that’s IT. Unlimited to 2gb is a HUGE step backwards. I would have been ok if they said it was 5gb for the iPad. but 2gb? Come on. I get 2.5mbps down on my iPad in my area and I have never had service issues either. The HSPA 7.2 upgrade was supposed to alleviate a lot of the bandwidth issues, and now they want to curtail usage further by trotting out the “2% are abusing the network…” line? Find who those people are and rate limit them! Don’t punish the rest of us. GAH.

  4. Steve W says:

    @Janey: YOU are one of the 2% that AT&T is targeting. They want you to download your “ABC shows and Netflix stuff” “on Wifi at home” BEFORE you go to work. Then you can watch them at work for free.

  5. Randy A says:

    @Steve You can’t download Netflix movies, it is a streaming service. Period. These plans are a rip off.

  6. JS says:

    @Janey you watch TV at work? What do you do for living?

  7. dfs says:

    The problem with reacting to AT&T’s new pricing scheme is that very few of us know how much bandwidth we are consuming, so we don’t know exactly where we are going to fit in this scheme of things, and so at the moment it’s difficult to know how to evaluate their pricing levels. I applaud the fact that AT&T is going to give customers some tools for determining their individual bandwith use. Far too few carriers or IPSs do this, and if they are going to set prices according to consumption rates or impose caps on consumption, then it’s vitally important that they do so. If they don’t do this voluntarily, the FCC ought to require it.

    • Yacko says:

      But the key here is not how much a customer uses. You’d like to punish yourself constantly checking bandwidth use; torture yourself vacillating whether to open an app with ads you might watch because you will come that much closer to the cap? The question is how scarce is AT&Ts bandwidth? Can they unilaterally declare it to be a scarce commodity?

      It’s funny they can decide there is not enough to go around, that it cannot be audited by independent means, and then AT&T sets rates in a cynical manner setting current low use customers at the throats of high use customers, when, in a mere matter of a year or two, we’ll all be fairly high bandwidth users with apps and uses not yet dreamed. Man, I’d hate to be Pandora or Slingbox. The whole thing is that this fiasco has all the same feel as when people said 640K was enough for a computer and 20MB enough for the rest of our lives.

      Oh, as they improve the network they are going to raise the caps? I think the opposite. They have you hooked, in a couple of years you won’t be able to buy anything but a smartphone and mandatory data plan. This is going to be like cable tv and utilities. Each year the price will go up or limits go down, you will pay more, much more if you use more and you will even pay more when you conserve. You will be a loser each day you use a smartphone.

      No matter how often they remind you that most will save money, I say no decision the carriers make results in lower profits, at least not for very long. This is about revenue and shareholders, plain and simple and the carriers pwning you and you having near zero control over them. The self-serving pricing of this supposedly scarce commodity may very well just be fraud. Who would know?

  8. Malcolm Cooke says:

    Welcome to the the rest of the world pricing the plans are roughly the same as the ROTW pricing ie Vodafone in Australia is $10 for 200 mg 30 for 2mg etc per month.

  9. Randy A says:

    @dfs I don’t know about AT&T, but for the 4 years that I have had a smartphone on Verizon I have been able to call #data and get a text with my usage. They now have an app for BlackBerry and Android and a mobile friendly website for the Pre. I have always been interested in my usage even though my plans have all been unlimited so I usually check a day or two before my month ends.

  10. dfs says:

    “It’s funny they can decide there is not enough to go around, that it cannot be audited by independent means…” Point taken, it’s a good one. But there are plenty of people in Washington, including some on the FCC, who would like to see phone carriers and ISPs reclassified as publc utilities. In which case, one hopes, your objection would no longer hold true. And at the moment, is there anything that can keep AT&T honest? Well, there’s Apple, right? If Apple became convinced that AT&T was jerking its customers around, surely it would pull the plug on their exclusivity dea

  11. Richard says:

    AT&T’s data rates are the number one reason not to buy an iPhone.

    If I decide not to get an iPhone, AT&T’s data rates will be one of the major reasons. I wonder if Apple will be able to hype the product enough to maintain sales without pushing AT&T to return to the old $30 “Unlimited” (5 GB soft cap) data plan?

    Sprint’s HTC EVO is looking better all the time because it has an unlimited data plan (and the promise of a 4G network which is, at the present, not available in many major markets).

    TWO YEARS with a $325 ETF if you learn that you just can’t live with a 2 GB cap? Apple has presented us with a “Hobson’s Choice” if ever there was one.'s_choice

  12. Atom says:

    First of these phones are very addictive and people will use them more and more and use there computers at home less and less. AT&T said only 2 percent of users use more than 2gb what they didnt tell you is that 2% is based for each US state now do the math now the number is much bigger than 2% (At&t overly charges family plans anyway for 1500 minutes for 2 lines and unlimited texting is 170 dollars plus tax is 15 so your looking at 185 for 2 people and if you go over the gb your looking at additional 25 for another 2 gb. then the cost’s of the phones with at&t are overly priced looking at 200 dollars for a good phone.
    T-Mobile not the best network but nothing wrong with them has the biggest sale ever on June 19th
    ANY 2 FREE PHONES with a family plan! (beat that at&t)!!!

    Sprint has 129.99 for 1500 minutes unlimited interent and any mobile 2 mobile not just sprint mobile users.. AT&T cant beat that..

    I remember I called Japan for 11 minutes Toyko using AT&T long distance and was charged 2 hundred and 52 dollars.. AT&T totally jipped me for that.. This company was 100 times better when it was Cingular
    better service; not stuck up rude sales rep just ready to pre-order an over-rated I phone
    thanks for your time and for reading my post

  13. Jewell Grimm says:

    Hey there! I’m at work surfing around your blog from my new iphone 4! Just wanted to say I love reading through your blog and look forward to all your posts! Carry on the fantastic work!

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