Technology: The end of all-you-can-eat wireless data plans
It's hard to be grateful to a company that offers its customers less value. But give Verizon Wireless this much credit, at least: When it announced that new subscribers would no longer be able so sign up for unlimited data use with the smartphones they buy, at least it gave them the chance to spend less if they don't do much streaming or downloading.
According to my colleague Nathan Olivarez-Giles, Verizon will replace its $30-per-month unlimited data plan Thursday with four alternatives: $10 a month for 75 megabytes, $30 for 2 gigabytes, $50 for 5 gigabytes and $80 for 10 gigabytes. Going over your limit will cost you $10 per gigabyte. But if you're an average user -- according to Cisco, the average iPhone user consumes 355 megabytes per month and the average Android user consumes 209 megabytes -- you can take the entry-level tier and still keep your bill well below $30.
Now, compare Verizon's move to AT&T's announcement earlier this year that it was ending its unlimited data plans for DSL customers (it already had bandwidth limits on its wireless plans). In AT&T's case, no one will pay less. Instead, some customers -- those who exceed the new bandwidth cap -- will pay more.
I don't blame wireless carriers for seeking to make the heaviest users pay the most for data plans. All of their customers in a given coverage area share bandwidth with one another, and those who stream video take up more of this shared resource than those who are just sending sending tweets. And network operators say a small percentage of their customers are responsible for a hugely disproportionate share of the traffic.
The caps will be problematic, though, if they don't grow over time. As it shifts to 4G technology, Verizon will not only have more bandwidth, it will be able to make more efficient use of it. The same is true for the other carriers that have invested in similar 4G technology. At the same time, the average amount of bandwidth used by its customers is expected to grow rapidly, encouraged by a proliferation of bandwidth-hungry apps.
Verizon's move strikes me as less troubling than AT&T's in one other way as well: Consumers typically have more choices in wireless than they do in fixed broadband. The wireless market has four major players today, but in most communities there are only two wired broadband providers: the local cable operator and the local phone company.
Of course, if federal regulators approve AT&T's proposed purchase of T-Mobile, there will be only three mobile carriers left. That's assuming Sprint, the smallest of the three, isn't killed off by the market muscle of Verizon and AT&T.
Verizon has said it doesn't plan to oppose the AT&T-T-Mobile merger. Its shift to limited data plans, however, may make regulators less receptive to the idea of letting AT&T swallow up a competitor with a penchant for discounting and a different approach to bandwidth caps.
-- Jon Healey
Credit: Amy Sancetta / Associated Press