Unlimited Data Plans Are Back—With Some Big Catches
Today, Sprint and T-Mobile both announced the return of what had once been a mainstay of the mobile industry: unlimited data plans. That’s good! But don’t get too excited just yet. While the two plans—T-Mobile One and Sprint Unlimited Freedom—do remove traditional tiered data buckets, there are, well, limits to what you can actually download. (AT&T also offers an unlimited data plan, but at nearly twice the cost, and to DirecTV subscribers only).
Take T-Mobile One. “The era of the data plan is over,” proclaimed outspoken T-Mobile CEO John Legere in a statement announcing the change. That’s true enough, if you don’t count $70 per month for data, talk, and text a data plan. What replaces traditional tiered data plans may not be as appealing, though, if you want to stream high-definition video ($25 per month, per line). Or if you use more than 26GB of data per month (you’ll get throttled). Or if you want to tether at better than glacier-like 2G speeds ($15 per month for 5GB of LTE hotspot use). Worse yet, if you use 6GB or less of data per month, you’d actually end up paying more with T-Mobile One than you would on a traditional T-Mobile plan.
That’s a lot of data, especially given that T-Mobile had been zero-rating (that is, not counting against data caps) video and music streaming from several partners through its BingeOn and Music Freedom offerings, respectively. Current T-Mobile customers can stay on their existing plans, but anyone switching will have a higher bill than they would have before, unless they regularly hit 10GB per month, not counting their Netflix and Spotify usage.
“T-Mobile’s unlimited plan isn’t all that attractive when you get into the details, but it makes for good headlines,” says Jan Dawson, chief analyst at Jackdaw Research. “The big question is whether people will dig beneath the surface and realize that entry pricing is actually higher now.”
Data-gulping individual customers will benefit, obviously, and since pricing per line decreases with each phone you add, T-Mobile One should have legitimate appeal to families. It launches on September 6. When it does, it should also appease net neutrality advocates, who rightly saw BingeOn and Music Freedom as challenges to an Internet that doesn’t pick favorites.
Sprint’s Unlimited Freedom undercuts T-Mobile One’s price, starting at $60 per month for one line of unlimited talk, voice, and text. It has its own set of limitations, though. Like T-Mobile One, it doesn’t allow high-definition video. It caps music at 500kbps and games at 2Mbps. The new plan gives you 5GB of high-speed tethering, with 2GB after that, and otherwise doesn’t throttle high-volume users.
As with T-Mobile, Sprint’s new unlimited plan will be right for some customers, but it’s by no means the one plan to rule them all. Still, they’re both new, competitive choices—something that smartphone owners have recently been missing.
“The market is increasingly saturated, so growth has to come from competitive wins, and T-Mobile and Sprint have been increasingly aggressive as they look to grow and try to catch up with the big two,” says Dawson. “That’s driven everyone to have to fight harder to hold onto their customers and win new ones.”
That’s partly why AT&T just yesterday killed overage charges for some plans, mirroring a previous move by T-Mobile. (You’ll still be throttled if you blow past your data cap on AT&T, though.) And why, while these new unlimited plans aren’t perfect for everyone, they have the potential to put even more pressure on AT&T and Verizon, who currently service nearly 275 million US subscribers between them. That’s before we even get to real innovators like Google’s Project Fi, which charges you only for the data you actually use, full stop. Imagine that.
More choice is more important than ever, too, as the death of two-year contracts and rise of universally compatible devices empowers smartphone owners to jump from carrier to carrier at whim. That effect is blunted somewhat by hardware installment plans, but for the most part, you can switch carriers as easily as you switch hair styles.
Traditional data plans may not be quite dead yet, and what’s starting to replace them won’t necessarily be better for everyone. If nothing else, though, these new “unlimited” offerings reinforce just how serious mobile competition has gotten. When that happens, customers will almost always win.