Carriers nix unlimited data plans

In a move that could have consequences for the continued growth of mobile video content, both Verizon Wireless and AT&T have announced plans to phase out their unlimited data subscriptions. Verizon Wireless, which currently offers an unlimited data plan on its 3G network, will return to tiered monthly plans when it moves to its first long-term evolution (LTE) network later in 2010. The network will launch in 30 to 40 U.S. markets by the end of 2010. AT&T, which plans to roll out its 4G network in 2011, is also segueing to two new data plans, both of which limit consumption.

According to a May report from the NPD Group, AT&T has the highest penetration of smart phones among U.S. carriers, at 32 percent of total handsets sold, while Verizon Wireless comes in second at 30 percent.

The move away from unlimited data plans is seen as a reaction to the continued increase of media consumption on mobile phones, which has caused well-publicized network congestion. Both networks are rolling out speedier 4G networks that handle more traffic and cost less. The bottom line is that by switching to tiered plans as well as building 4G networks, the carriers are positioning themselves to gain from consumers’ increasing appetite for mobile media while they spend less to provide it.

According to the Financial Times, Verizon Wireless CEO Lowell McAdam predicted that Verizon Wireless’ cost of carrying 1MB of data over the LTE network would be half to one-third of carrying the same data over the current 3G network. Mobile HD and video games are two services that Verizon Wireless is expected to offer on its LTE network. The company is likely to show LTE handsets at CES 2011 and launch between three and five of them in the first half of that year. Meanwhile, McAdams noted that voice services will switch to VoIP in 2012 for all LTE subscribers — another cost-savings measure for the carrier.

The sole carrier for the iPhone, AT&T, is replacing its unlimited plan ($29.99) with DataPlus (200MB for $15/month) and DataPro (2GB for $25/month), with the option of additional data (200MB for $15 or 1GB for $10) and a tether for $20/month (which allows iPhone users to use the phone as a broadband connection device for laptops and netbooks). New iPad customers will not be able to take advantage of the unlimited plan but will be offered 2GB for $25/month.

AT&T states that its new, tiered plans will make the mobile Internet affordable to more people, and that 98 percent of its current smart phone customers use less than 2GB of data a month on average.

Many in the industry question whether the demise of the unlimited data plans will have a dampening effect on the consumption of mobile content or even on the purchase of smart phones, citing consumer wariness about unclear data plans. But any significant impact — on mobile content producers, merchants, marketers or consumers — remains to be seen.