Unlimited Data Plans going the way of the DoDo…

Funny the things you start and don’t finish… I started this article May 31, 2011 and just today, Verizon confirmed the retirement of unlimited plans.

Here is the beginning of the post I wrote when this was a rumor: It appears that Verizon is moving -in a way- towards AT&T‘s line of thinking that all you can eat data should be, well, retired. Being an individual who has held 2 of these plans for the last 3 years, as well as from about 2 years before that while I was using my MotoQ, I can say that I have used and paid for a LOT of data. However, my maximum personal usage has never exceeded 4GB in a month. The total usage for the 3 data plans I hold which cost me $85 per month (2 – unlimited plans @ $30 each + 1 – 2GB plan @ $25) typically is about 6GB total. While some may think that I a lot, I know some individuals who exceed 20-40GB per month on a consistent basis.

Today, Verizon confirms that on July 7, 2011 it will be moving to a fully tiered structure for data plans so smartphone users. While AT&T, T-Mobile, and now Verizon say they are looking at this as a cost saving strategy for consumers, those terms ring hollow based on the costs for the very low end plans. Below is a table I have compiled on the data rates by carrier as of 7/5/2011. As with anything, please check with the carrier for up to the minute rates and for all official policies. (Note: 1,000 MB = 1GB):

As you can see, the cost structures for the low end plans are 7-13 (or more) times the rates for the higher cost plans. Personally, I really struggle with the need for a carrier to force a capped data plan and then “offer” tethering as a “feature” when most of those users have been paying for an unlimited amount of data previously, but not been able to tether any devices to fully access that data. Now, by all means all users are not saints, and some most likely really abuse the data available on their “unlimited” plans by leveraging bit torrents etc. But seriously, if this was the case and driving data usage so far through the roof that carriers could not keep up with the demand… Why is it that all carriers charge for text messaging separately when they bill it as “data” and for the most part it is free to them as they simply piggy back in the carrier channel transmissions required to create a connection between a handset and the cell tower.

Text messages are not just tiny; they are also free riders, tucked into what’s called a control channel, space reserved for operation of the wireless network.

That’s why a message is so limited in length: it must not exceed the length of the message used for internal communication between tower and handset to set up a call. The channel uses space whether or not a text message is inserted. –

NY Times Bits section 12-28-2008

So, is mobile data usage going up? Yes and in a big way. A resent NielsenWire study showed an 89% growth rate for the U.S. Market alone in the past 12 months. But, before you feel so bad for the poor carriers, here is a comparison of AT&T and Verizon’s profits over the past 5 years:

Take note of the trend for AT&T that started in 2007… Which coincidentally was the introduction of the first iPhone and the true start of the consumer “smartphone” craze that we are really just moving into full swing. Here is a better look at the same data but over a 10 year period:

It would be unjust to claim that simply from this data it is easy to see how Verizon has built out a more reliable network based solely on profits, but AT&T does seem to have a lot of profits over the same timeframe that Verizon profits were substantially lower… That said, be sure to understand the “B” equals BILLIONS of dollars in profits for both companies. So, while it does take a lot of money to fund the infrastructure that we all enjoy and leverage daily to do everything from blogging and research, tweeting and Facebooking, listening to music and watching videos, texting and even occasionally making an actual cellular phone call, we all pour billions of dollars into carriers who mix and match data costs to only one benefit: their own profit margin.

Image Credits: AT&T / Verizon profit charts screen clipped from Wolfram Alpha search results


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