Unlimited data, once a consistent option among cell phone carriers, has been on the outs lately with the big dogs of wireless. But fourth-place carrier T-Mobile is hoping to win back some users — and market share — by offering a true unlimited data plan starting Sept. 5.
The new T-Mobile plan will cost $90 per month for unlimited voice, text and data if you get a subsidized phone, or $70 per month if you pay full freight for your cellular device. On T-Mobile’s older plans, users’ connection speeds would be throttled when they exceeded their monthly data limit, but the company promises that this plan will be truly unlimited.
The move runs counter to actions of industry leaders AT&T and Verizon, who have revamped pricing structures to better monetize users’ data needs. AT&T first began phasing out unlimited data for smartphone users in 2010, and Verizon eliminated the option for new subscribers in 2011. Now both companies are launching data-share plans to encourage families to purchase a pool of data and use it for all of their smartphones, laptops and tablets. The cheapest option, for a single smart phone with 1GB of data per month, will run you $85 with AT&T and $90 with Verizon. Meanwhile, third-place carrier Sprint offers unlimited data, voice and text for $110 a month.
“The growth in usage and potential revenue is really in data,” says Wayne Lam, a wireless communications analyst at IHS Technology. “All those all-you-can eat data programs were sort of a necessary evil to entice users to use the iPhone.”
How much data does a person need, exactly? According to a Nielsen study, the average smartphone user only used 435 megabytes of data per month in early 2011. However, as smartphones become more powerful and network speeds increase, more and more subscribers are becoming “power users,” utilizing the phones’ multimedia capabilities. According to Verizon’s data usage calculator, streaming an hour of music and watching a five-minute video on YouTube each day will put you more than a gig in the hole by the end of the month.
By offering unlimited data, T-Mobile hopes to bring back some of the hundreds of thousands of subscribers who have abandoned the carrier in the last year. They may need a better slate of phones for that to happen though—currently, T-Mobile is the only major carrier without the iPhone. “A combination of unlimited data and Apple iphone would help them turn things around,” Lam says.
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Still, it seems unlikely that the new plan will sway AT&T and Verizon, who have almost 200 million American subscribers between them and the most robust mobile networks, to do the same. Verizon hauled in $6.9 billion in revenue from mobile data in the second quarter of 2012, an 18.5 percent increase from the days of unlimited data a year earlier. “This is a long-term strategy for Verizon and AT&T and they’re not going to change that path,” Lam says.
According to Lam, unlimited data will be tough to maintain in the long term as users’ consumption needs increase. “This whole notion of unlimited data is, for all practical purposes, unsustainable,” he says. “The only way to grow is to start charging for data just like any other utility.” Sprint, who has marketed their unlimited data plan heavily, admitted to The New York Times that it wasn’t necessarily a permanent solution.
For now, though, users will retain the option to watch cat videos and post photos to Instagram without fear of overage fees from the two smaller wireless companies, and the renewed attention on T-Mobile will likely keep the sector’s near-duopoly in check a while longer.