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AT&T phasing out unlimited data plans for cellphones

Fee structure that goes into effect for new subscribers Monday will cap use of e-mail, Web browsing, social-network posting and streaming video under two pay plans in an effort to curb heavy users.

June 03, 2010|Nathan Olivarez-Giles, Los Angeles Times

In a move intended to curb heavy users of its cell network, AT&T Inc. is phasing out its unlimited data plans for mobile phone subscribers — a move likely to be adopted by other major mobile carriers.

The fee structure that goes into effect for new subscribers on Monday — the same day Apple Inc. is expected to unveil its new iPhone — will cap use of e-mail, Web browsing, social-network posting and streaming video under two pay plans.

Voice calls and texting, which fall under different plans, won't be affected.

Greg Miller, a telecom analyst with Collins Stewart, said that increased online use of devices such as the iPhone and iPad tablet computer caused AT&T — which currently has the exclusive right to offer cell service for those Apple gadgets — to cut out its unlimited data plans.

"You could see AT&T's network brought to its knees in the future if they didn't rein this in now," Miller said.

Current AT&T wireless customers who have unlimited data plans, which are priced at $30 a month, will be able to keep them, even if they switch to different smart-phone models.

AT&T has said in the past that just 3% of iPhone users have been taking up 40% of the data traffic on the company's mobile network, which has resulted in lackluster performance in major markets such as New York and San Francisco.

Industry analysts say it's only a matter of time before other mobile service providers follow suit, bringing an end to the days of all-you-can-eat data plans for smart phones and other mobile Internet-connected devices that use cell data networks.

"The other carriers have no choice, just like AT&T had no choice but to do this in some ways," said Jack Plunkett, chief executive of Plunkett Research in Houston."There are a handful of subscribers that are using a ton of bandwidth, and it's simply fair that you should pay for what you use.

"Will that turn some customers off at first? Yeah. But this is a necessary step."

Miller said the company would try to get subscribers to make more use of Wi-Fi hotspots for Internet functions. Wi-Fi doesn't use cell data networks.

"You need to train people to look for Wi-Fi hot spots and connect their phones to Wi-Fi when at home," Miller said. "A lot of us take for granted those sorts of things on unlimited data plans."

In place of the $30 unlimited plan, AT&T's new prices for data will be $15 a month for 200 megabytes and $25 for a 2-gigabyte plan.

Users who go over the cap for the lower-priced plan will be charged another $15 for an additional 200 megabytes. Going over the cap of the higher-priced plan will cost $10 per gigabyte.

AT&T spokesman Mark Siegel said this would result in a cost savings for most AT&T customers.

"Right now it's one size fits all with a $30 data plan," Siegel said. "About 98% of our smart-phone customers use less than 2 gigabytes a month, so now, if you use less than that, you can pay less."

But Dinah-Maria Moyer, a 28-year-old Belmont, Calif., resident and a self-described Apple die-hard, said 2 gigabytes of data isn't enough for many users.

"I pretty much live on my iPhone and my iPad 3G," Moyer said. "It's pretty hard to break the habits I have, the way I use my iPhone, the way I've used it for the last couple years.

"It will be hard to change my behavior, but maybe after seeing a couple of my bills, I'll think a little differently."

In February, Cisco Systems Inc. released a study projecting that about two-thirds of the world's mobile data traffic would be in the form of video by 2014.

The study also said that global mobile data traffic in general would double every year through 2014.

nathan.olivarezgiles@latimes.com

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