At&t Changes Rates Again On Wireless Data Usage From Smart Phones

This price change was expected from AT&T, Verizon

, Sprint and T-Mobile. AT&T was just the first company to pull the trigger. Something similar happened a few years ago when every major competitor jumped in and introduced their unlimited data plans. Why all the changes?

Back in the 1990's it was a simpler world. A cell phone was just that, a phone. Then the networks changed from analog to digital and set the groundwork for today's wireless data revolution. At the time speeds were slow and all we used the handsets for was emailing and text messages. However over the last decade speeds increased and new features were introduced.

The problem was smart phone sales and wireless data usage was growing too slowly. Customers were just afraid to get a giant bill so they avoided using the features. Not that there were that many features to actually use yet.

So the industry decided it was time to goose the growth. They introduced their unlimited plans a few years ago and suddenly smart phone sales went through the roof. Some of that was thanks to Apple with their iPhone, but smart phone growth has been on a steep upward climb ever since. Wireless Apps jumped from a few hundred just a few short years ago to around 150,000 now and it is still growing.

If wireless data capacity was unlimited then price changes might not be necessary. However when we all jump onto our new smart phones and use them we can clog the networks and slow service for everyone. So networks must continue to pour billions of dollars into their networks to stay just ahead of the demand curve.

In that world AT&T says roughly 2% of users are very heavy users and are negatively impacting the service for everyone else. So they just decided to move away from their unlimited pricing.

This was expected as we have heard of the problems caused by heavy users and also heard of the changes that were coming over the last many months from other carriers.

So AT&T was the first to jump in and change the rates. They say the new rates will actually cost the average user less. That means 98% of customers will pay less. Not bad. That also means the 2% that over use the networks will have to pay for what they use. That also seems fair. That way everyone should see improved quality.

When the unlimited plans went into affect it all happened quickly. Now with this move away from unlimited plans I expect we will hear from Verizon and Sprint quickly too. I think Sprint will be last so they can undercut everyone else by a few dollars a month as they now do.

The result should make the experience better for everyone. The reduced usage from some heavy users will free up capacity and take the heavy load off the network making usage easier for everyone.

This is not the first price change in wireless data. We have seen several over the last decade. And it will not be the last. I expect prices and plans to change regularly, every few years, as the number of users increase and what they do online changes.

Remember ten years ago we only used these phones for phone calls. Today we send email, text message, surf the web and use Apps. Tomorrow we will watch television, movies, have video calls and more. This takes enormous wireless data bandwidth. Usage patterns will change.

Just like the networks introduced their unlimited plans and wireless data usage increased dramatically they also suddenly had a new problem. A few users were over using the network. So they had to have a correction they didn't foresee. This will happen over and over again. It is the process of building a very fast growing industry.

by: Jeff Kagan

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