AT&T proves tiered data pricing is inevitable, but are the new plans a rip off?

AT&T death star imageAT&T earlier today announced that they will be completely revamping their wireless data plans and bringing in the DataPlus and DataPro pricing tiers to essentially assassinate the current unlimited data plan altogether. Starting June 7th, Big Blue will become the first US wireless carrier to pull the trigger on tiered wireless data plans in preparation for the new iPhone and the iPhone OS 4.0′s ability to tether over WiFi. The move was expected and will likely be followed by every major wireless carrier in the US adoption some sort of tiered data pricing model. Unfortunately, as the first mover, AT&T has unabashedly screwed the pooch on this one.

The Setup
AT&T wants you to believe that you’ll be saving $5 per month. What they are actually doing is charging much more per MB of wireless data. More so if you opt to share your smartphone’s internet connection with a computer (which is called “tethering”). The new $15 DataPlus plan offers a small monthly savings and is limited to just 200MB of data. The $25 DataPro plan offers a negligible monthly savings in return for a data plan that’s limited to 2GB. If you want to tether your data connection, it’ll cost you just $45. Those prices are cheaper than the current $30 unlimited data plan and $60 data plan + tethering option that’s currently available. Cheaper is better, right? Not so fast.

The Pinch
While the DataPlus plan might be a good fit for lightweight data users, we can’t help but feel insulted by the higher-tier plan. The DataPro plan offers just 2GB of data, which is drastically less than the previous unlimited plan (obviously). To make matters worse, you only save $5 per month. To us, that’s just not a worthwhile savings, and those perceived savings become even less worthwhile if you plan to tether.

Sure, the currently available (until June 7) data plan + tethering option will cost you $60, which is not a small amount. But, that monthly fee gets you unlimited data for your handset and 5GB of data for sharing with a computer. The new DataPro + Tethering option might be cheaper at $45 ($25 + $20), but you get significantly less. For one thing, you have to share the same 2GB data quota between your smartphone and your computer – if you use 1.5GB on your computer, you’re left with only 500MB for your smartphone.

If you’ve ever tethered a smartphone to a computer, you’ll know how easy it is to chew through 2GB of data. If you go past the 2GB cap, you’ll have to pay an additional $10 per GB, bringing the real-world price of using 4GB of data on the DataPro + Tethering plan to $65. That’s more than the current plan and you still get a smaller data allotment. From a cost-per-MB standpoint, the new plans are a rip off. It’s also a little unsettling that AT&T is charging subscribers an additional $20 to share your smartphone data pool with a computer.

The Justification
AT&T claims that most users are only going to go through about 200MB of data per month, which justifies the new tiered data model. AT&T also claims that this new pricing model will save customers money. While true – damn near all AT&T customers will never reach the 2GB mark – there are those that routinely hit the 5GB mark on a monthly basis. What they’re not telling you is that they are basically overcharging power users to help subsidize the cost of data for lighter-weight users.

Rip Off?
For those of you that skipped down to this here conclusion, let us sum it up for you – AT&T’s tiered data feels like a rip off to us. To be clear, tiered data pricing structures are not the problem here. The tiered data plan model is here to stay, and it makes sense – you should pay more if you use more data. The problem, though, that AT&T has created for itself is that they are pretending to save customers money on data plans, but are in fact charging more per MB than before. Doubly (even triply) so if you are a heavy data user. It’s one thing to charge users for what they use, but charging subscribers more for the same service and then charging power users even more just rubs us the wrong way.

What say you? Does the new AT&T data pricing model seem fair? Are you going to grandfather your unlimited data plan and forgo official tethering (unless you jailbreak, in which case you can tether all day, no problem). Or, will you be jumping on the new data plans for the new iPhone?

  • Oliver

    That is why I'm going for the EVO 4g on sprint. At least I'm getting more than 2gb, even with the +10 surcharge for Premium phone/4g/whatever you want to call it.

  • AT&T is a ripoff

    This would cost me $45+ a month if I were to consider switching to AT&T, guess my decision just got made for me.

  • jerry

    In five days, according to the AT&T my wireless app, I've used just over 100Mb. That would mean that if these five days were typical, I could use a 2G plan just fine. Oh wait. Wait. That's right.

    Netflix. YouTube. Streaming music. Podcasts — I haven't done any of that in the past five days because I've been busy with work.

    I just can't see how their new 2G "Pro" plan is compatible with Netflix, or any similar kind of app, much less tethering. Perhaps Netflix and the future are wifi futures.

  • DavidB

    This will have a very wide systemic impact. A whole lot of iPhone/iPad users are about to become VERY unhappy with higher bills. And a lot of BlackBerry users (far more efficient wireless data consumption) will rejoice at their lower bills.

  • Dennis

    You said: "While true – damn near all AT&T customers will never reach the 2GB mark – there are those that routinely hit the 5GB mark on a monthly basis. What they’re not telling you is that they are basically overcharging power users to help subsidize the cost of data for lighter-weight users."

    Maybe this is just a matter of perspective. From my perspective, it looks like those of us using lesser amounts have been subsidizing the data usage of high end users for years. It's about time that YOU pay for what you use, rather than charging a higher price to everyone else to subsidize your addition.

  • Sean Chen

    I bought an iPad with the expectation of streaming movies off 3G on it.

    Within weeks of owning it, my $30 "unlimited" & "no contract" data plan has now become either a LIMITED data plan (unlimited through high cost) or a "non-contract" that drops my unlimited data plan the moment I do not renew.

    Both Apple and AT&T come out of this looking REALLY, REALLY bad.

    AT&T is doing what it feels it must, but frankly, they must not care what people think of their company. This is the kind of bad PR move that you can't advertise/buy your way out of.

    I wouldn't have bought an iPad if I'd known this was going to happen.

    Quite frankly, I feel RIPPED OFF by both Apple AND AT&T.

    It's bait and switch plain and simple.

    • Head Honcho

      That last sentence you made"It's bait and switch plain and simple" i couldnt agree more.

    • Cody

      This is definitely not the fault of Apple here. Apple had no idea that they were going to change their data plans the way they did.

      • Jose

        In a way, I agree. They have no control on the practices of ATT. I'm sure, though, they had an idea of what was going on. Either way, it doesn't make it Apple's responsibility.

        Crap. I hate paying more. At some point, I'm just going to go back to jailbreak and live the rest of my life happily. Maybe I should do this now…

    • Deen777

      Wrong. If you have unlimited then you can keep your unlimited plan. Nobody is making you do anything!

    • Appleisfornoobs

       lol you have an ipad noob

  • BETTY TOTTEN

    ATT IS INE OF AMERICAS BIGGEST RIP OFF EACH PERSON WITH SAME SERVICE BILLS ARE DIFFERENT AND WHEN YOU CALL THEM YOU GET EXCUSES AND THE RUN AROUND AND TIMES WHEN THEY KNOW YOU ARE ONTO THEM THEY HANG UP AND THAT BUNDLE PACKAGE THEY OFFER ON TV FOR 100'00. WELL ITS ANOTHER SCAM TO MAKE YOUR PAY MORE YOU WILL GET VERY HIGH BILLS AND THERE EXPLANATIONS ARE FALSE

    • darron

      Oh my gosh, turn off caps lock and use punctuation please! Your point will come across muc better

  • Sean

    Big Blue? I thought this article was about AT&T, not IBM…

    Poor poor journalism, google isn't particularly difficult to use (or master). A search for "Big Blue" brings up, can anyone guess? IBM!

  • Kenn

    Unless you are getting your phone paid for by an employer; Data Users are over the barrel.
    I think I will finaly jailbreak my iPhone just for tethering/hotspot and stay on the unlimited plan.

  • Jeremy

    even if you upgrade to the new iphone, you're still grandfathered

    • john

      not true

      • CTM

        Yes it is. Get your facts straight john, because you don't know what you are talking about.

      • Rob

        Yes, John. This is true. AT&T has made it clear, mainly on their FaceBook page, that if you already have the $30/unlimited data plan, you can keep it – even when upgrading to a new phone. If you are a current AT&T customer, the only way you can lose your $30/unlimited plan is to switch to one of their new data plans.

      • Cody

        Actually, Jeremy is correct. AT&T has already answered this question. As long as there isn't a lapse in your service, you will be able to upgrade to the new iPhone and keep your current data plan.

  • dennis

    This is why I’ll be dropping my iPhone when my contracts up and switching to android or back to my blackberry. Either way I won’t be with AT&T anymore.

  • Jimm

    Ok, am I crazy? I have 3 iPhones on my account. None go over 200mg/month. My bill (with a 4th non iPhone on the plan) is almost $200/month! If I drop to the DataPlus tier I will save $45/month and not lose anything. I may go over my 200mg one month, but $15 would just put that one iPhone into the cost it has now and the others would still be saving me $30.
    Anyone except power users see anything wrong in what I see?
    I am not a fan of AT&T. Dropped calls are making my life miserable but at least I will pay less for the privilege.

    • MikeD

      I'm w/ you Jimm, this new plan is going to cut my data charges from $60/mo to $30 for the two iphones on my family plan. I use about 100M a month and my wife 120M.

      Good stuff AT&T, it's about time the power users paid their share, i'm tired of subsidizing them!

    • @SlowDayToday

      I couldn't agree more. 90% of iPhone owners will save money. It just so happens that the remaining 10% are the most vocal because they spend the most time on the internet. Out of that 10%, 5% haven't realized how little data they actually use.

    • Aaron

      I'm a power user and I don't see anything wrong with it. But as the author pointed out, it's not about the tiered plans. There's tiers all over AT&T's plans anyway, it's the removal of the Unlimited option. I need unlimited, I want unlimited, I want to pay for unlimited. Heck, I can have unlimited minutes, unlimited texts, unlimited MMS, but NOT unlimited data? WTF? How is that within their grasp of scope to 6 months prior start offering all unlimited plans for voice and text, and then two days ago, yank unlimited data for reasons that contradict why people were asking for unlimited options for text and voice?

      I like that I can cherry pick my minute and text plans and my data plan and I appreciate that I had (emphasis there) options to do each of them as unlimited if I so chose. I think AT&T's mentality is that we were asking for more options and yet, they took away the best part of the iPhone's month to month cost. That makes no sense, even if they point the finger at me and every other power user.

      Whatever provider out there that champions that they'll never charge for data is about to start RAKING in new corporate and personal business as people dive off of their AT&T devices for the competition as soon as the "grandfathering" phase is eliminated.

  • @Shultzman

    I don't agree. It depends on how much data a person actually uses. I'm using 1 gig on my iPhone and 3 gig's on my laptop data. My current cost is $90 /month. ($30+$60) Under the new plan I can get the same service using tethering for $66 /month. ($25+$20+$10+$10)

  • @Shultzman

    I don't agree. It depends on how much data a person actually uses. I'm using 1 gig on my iPhone and 3 gig's on my laptop data. My current cost is $90 /month. ($30+$60) Under the new plan I can get the same service using tethering for $66 /month. ($25+$20+$10+$10)

    That's a real $25 /month savings for me and I like it! If someone else is using tons of extra bandwidth, I shouldn't have to subsidize them, they should be paying more.

  • Chris

    All this noise is over nothing. Hasn’t AT&T said that people with the unlimited data plan can keep it, and only new customers have to switch to the tiered plan?

  • ericq

    Above under — The Setup – he states-
    Those prices are cheaper than the current $30 unlimited data plan and $60 data plan + tethering option that’s currently available

    There is a data plan + tethering option that's available today ??? before this new roll out..

    E

  • Clarence Humber

    I can see the point that unlimited data for a flat fee is not a sustainable business model. A usage-based model is more fair, but these new plans aren't quite there. $15 for 200 MB and if you go over you have to pay another $15 for 200 MB? That brings you right back to $30 and you're only getting 400 MB. The DataPro plan is better at $25 for 2 GB, but then they hit you for $10 for each GB over that. I say throw away both plans and replace them with one simple plan of $10 per GB prorated (1$ per 100 MB).

    I fail to see why I have to pay any extra to tether to my computer. It doesn't cost AT&T any extra if the data I'm paying for goes to my iPhone or to my computer via my iPhone. The $20 tethering fee is a junk fee.

    Can you change plans as needed? I can sometimes live with 200 MB/month when I'm home but when I travel I need at least 2GB/month. Can you not get a data plan at all and just get a MiFi and connect to that?

    • @aeron1488

      What I read in the press release is that you'll be able to switch plans mid-billing cycle and have it retroactive to the beginning of the billing cycle you're currently in or prorated to start that day.

  • Andrew

    i'm sick of you americans whining about data plans. In my country I pay $20 / month for 2gb (no one has unlimited, it's unheard of), but if I go over it, i'm charged $0.35 per MB. Yes, not $10 / GB, i'm charged $350 / GB. Oh, and 2GB is the highest plan they have.

    • Mak

      Shut up Andrew, no one cares about you.

    • Rob

      Of course you're sick of hearing the complaints – you've never had the opportunity to use an unlimited wireless data plan! If you're given an unlimited data plan and you utilize it (i.e., Netflix, podscasts, streaming video, streaming radio, etc) and wind up with more than 5GB a month, I agree with voicing your concerns. Do your best to fully understand the situation before commenting :)

    • jon

      im sick of you non americans.

    • american

      shut up and eat your mayonnaise sandwich.

  • Milton

    AT&T openly invited all their current network woes by trying their darnedest to be the carrier of the iPhone. They couldn't foresee the impact of power-users until it was too late. Now it's us who have to pay the price or their incompetence.

    It's the small group of early adopters and power-users that help to push and improve technologies and services. This is a stab in their backs.

    AT&T shouldn't have removed unlimited data packages, they should have done what my ISP does, give us unlimited data but create tiers of data speed instead. Most of us with high-speed internet are completely familiar and happy with this method. Seems that if a compromise had to be made, that would have been easier to swallow.

  • Cannibal Shogun

    I've been holding off on getting an iPhone, waiting for the data plans to get better. While my main beef is with a separate charge for texting, this is clearly a step in the wrong direction. Looks like I'll be holding on to my old phone for a while more.

  • swift2

    I have to admit, I was amazed when I checked my usage over the last year that, in fact, the 200 MB plan would be fine with me. I'd save $15 a month. I don't have or want a laptop, so tethering is not an issue. The only thing is, if the new iPhone is fast enough that I could regularly stream video over 3G, I'd be SOL. So, hmm. Will the iPad I might get still only offer 3G via AT&T? And how much would I have to pay for non-Wifi access.

    AT&T is the hound of hell.

  • CTM

    It's simple, people… USE THE FRIGGING WIFI OPTION ON YOUR IPHONE. In the US, you get free AT&T wifi at Starbucks/McDonald's/etc. Using 3G to upload an endless stream of idiotic YouTube videos is just stupid, slow for your computer and given the known network bottleneck, RUDE. Those people SHOULD be paying more. I have 4 iPhones on a family plan. In a year, I have gone over 200 MBs only twice on one phone and that was while traveling. I will be interesting to see if the new iPhone 4.0 lends itself to more data, but I would never go over 2GB.

    There is a reason wifi is so ubiquitous. People who use 3G instead of having a capable internet connection in their home/office SHOULD be paying more.

    • ShoreTac

      Ok, so let me get your bullshit straight here. So because you say so, everyone should use wifi when the basic idea of unlimited wireless data is so that you have it anywhere, not just at home. It's a mobile device there chief, not everyone spends their lives at home or at mcdonalds.

      • Guest

        My guess if you aren't home or at mcdonald's or the other 10's of thousands of Wifi hotspots, you're doing something that doesn't require you to watch YouTube videos…at least I hope so.

  • Ben

    Way muddled logic here. Show me exactly how the new plan is charging doubly or triply per MB. Don't just wave your hands and cry about it. For the record, I think you're full of shit. I currently pay for a cell plan and $50 for cable internet at home. If I applied that $50 to the cell bill instead, I'd get 7GB of traffic each month, and I don't use anywhere near that. And TWC blows donkey dong here.

    Just because you want to download movies for free does not mean that I should pay for your ability to do so. Douchebag.

    • David

      5GB on the old plan costs $30/mo.
      5GB on new plan costs $25 + 10 + 10 + 10 = $55/mo. Almost double. Use more, its even more expensive. The old plan wasn't capped at 5GB.
      Use 5GB on the 200MB plan and I can't imagine what they'd charge you. $15/200 MB? Thats $60/GB = $300? Ya… that sounds like more than double.

      Don't use data? Thats your problem. Don't get an iPhone. Stick with a basic phone.
      Want to use an iPhone only on Wifi? Can't. AT&T forces you to pay $15 for almost no data.
      Only use Wifi? Get an iPod touch.

      There are choices. HTC Incredible on Verizon is awesome. Great coverage. $30/mo unlimited with actual 3G coverage everywhere.
      HTC EVO on Sprint is awesome. Huge screen, phone isn't much bigger than iPhone. Makes the iPhone look ridiculous.

      • Guest

        "Get an iPod Touch"

        the iPhone is a phone you know?

  • happy

    I rarely use more than 50mb/month (email, web surfing, google maps, and occasional laptop tethering).

    So for me, I’ll be saving $15/month.

    In fact, 95% of AT&T users will be saving money. The only people paying more are the bandwidth hogs. And those people should pay more.

  • L0g0s

    The real story here is the one AT&T has been wise enough to notice, people are using more and more data.

    There numbers may state that the average user uses less than X amount a month. But I bet the year upon year data usage is exponential. Things are changing and they are trying to make a quick buck off of it. I bet in a year or so 200 MB will be like 200 txt msgs. Some people will be able to live with that lowest tier plan but most won't be.

    Now what they let you do with that bandwidth makes no sense. Tethering vs not, smart vs dumb phones. You pay for X amount of bits a month, limited or unlimited, they shouldn't care what is using said bits.

  • GBgotnoRocks

    Boost Boost Boost!!!!!!

  • Guest

    Folks, you do realize that if you switch to the new data plans, whether you have an iPhone or iPad, that you will be able to utilize the Wi-FI connections for free? Whatever you stream over wi-fi, admittedly faster than 3G, does NOT count towards your data plan…how many of you have home networks? how many of your business travelers have a boingo or some other wi-fi account for hotels and airports? How many of you live close to McD's, Starbucks and all the other places where free wi-fi is available? NOW take a look at whether the new data plans are a rip off or not..

  • jon

    Just wait a few years and you will realize how valuable your unlimited plan really is. To those of you saying that they only use 200MB/month, but how much data did you use per month 2 years ago? AT&T did not make these changes to save their customers money, they did it because it will make them more money in the long run. (When everyone realizes that 200MB just isn’t going to cut any longer and they are forced to upgrade there data plans.)

  • AnimalH

    Boils down to greed and $$$$$. Why charge for a service when they can charge us for every drop of gas or kilowatt of electricity? They cant wait until technology gets better and video resolutions increase so they can make us feel like pathetic wimps for using devises that only play video in 1080p. More data…More $$$ Very similar to what happen when soccer moms just had to drive large vehicles like Ford Excursions and Chevy Suburbans about 10 to 15 years ago. Laughed my a** off the other day when I parked next to a Hummer that someone had keyed the whole passenger side of. Don't get me wrong, I love high resolution video, I just don"t know if I will be able to afford it.

  • james

    As data speeds increase, so will consumption. Uploading 1 image currently takes 1mb. When an 8mp camera is used, the file size will probably be 3mb. Front facing camera will eat into my data pro plan. Navigation will take 3mb per trip. It's all going to add up quickly. When LTE arrives and we'll be viewing youtube hd and using skype hd, we'll all be paying $100 a month in data plans.

  • ShoreTactical

    Anyone see how much data gets used just by simply using apps like pandora, xm, or slingbox for a few hours. This is a ludicrous bit of gold digging by at&t. Wait until video chat becomes available for the next generation iphone and see how many of you go over the caps then. This is bs, I plan to leave at&t first chance I get. Android FTW.

  • Ken

    The writer of this article is an idiot. Have you checked ur usage lately? If you can go over 2GB on a phone, you need to look up more and get a life. I use about 1.5 GB on my N1 and I am on it all the time, video, music, apps, reading the news and social networking. If you are on your phone that much you are exactly the reason AT&T imposed these limits, so people like my wife (who uses around 100MB on her iPhone) and I don’t have to subsidize your usage. Get a life and quit link baiting.

    • http://pulse.yahoo.com/_V2WZ7HQ2P4POCNDAD57D4MWWWU PJ

      i think the writer of this article has a point…at and t offers 200mb’s for 15 bucks a month…then for only 10 bucks more they offer you an extra 1800 mb/s…that is just not logical…if you have the dataplus plan and you go over, at and t charges you an extra 15 bucks for another 200mb…if you have the datapro plan they charge you 10 bucks if you go over and give you an extra gig of data…i think they are going after smarthphone users in general because they think if you can afford the phone they can impose some other cost on you…and anyone can use more than 2 gb if you tether for even just a few hours

    • Socrkids

      Instead of calling the writer an idiot or socially inept, maybe you should read the whole article. It’s about the tethering between phone and computer, not just phone use. There are people out there, business and student that would reach 2gb with no problem, especially when using their computers for not only research and work, but for music, video, video chatting, etc.

      This is an informative article, giving his view, not TELLING users this is the end all fact for everyone!

  • Linda

    The whole idea of having limitations on my data plan doesn't set will with me. I would be so worried about going over that I probably wouldn't use half of what I could use.

  • Micah Smith

    I would be ok with this… ROLL OVER THE DATA LIKE THE MINUTES, and I am fine with it

  • http://twitter.com/DracoAzule Daniel Briggs

    Just get the cheapest plan from AT&T, buy a Sprint MiFi 2200 mobile wireless hotspot, activate it through Millenicom with their $70 a month unlimited BYOD plan, and use it to tether both your laptop and your smartphone.  And the only thing that will use your AT&T data is MMS

  • Mdal

    at&t is a complete ripoff I have been charged just for sleeping! one month they charged me for a plan but I had no service, it took 3 minutes just to load this page to complain! the headphones and charger broke at the 3 month mark! the phone freezes and the only thing they do ontime is
    to deduct your payment. at&t is so sorry that when I go to the mall to use the hotspot my phone and laptop cannot connect, so I use the mall connection! I was warned but did not listen! my bill was over 200 dollars last month and I have no idea why!

  • Flyfish

    I just bought my Iphone4s at the ATT&T store.  I have a family plan now with four lines. Not two weeks into the new phone (which is great) and I am already being ripped off again by AT&T,
    All I use the phone for is an occasional call and some weather infor while on the road. And maybe a short email now and then.
    This Corporate Greed stuff has gotta stop!

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