Say Goodbye to Unlimited Data Plans

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Data Plans changeUnlimited data isn't as unlimited as it used to be.

AT&T (T) advised wireless customers on unlimited data plans over the weekend that it plans to begin slowing down its most active smartphone owners.

Come October, customers among the top 5% of AT&T's data users in any given billing period will be subjected to reduced access speeds. Multiple notices will go out and an initial grace period will be observed, but their access will inevitably be slowed until the end of the billing cycle, when the entire process will play itself out again.

It's Data Hog Hunting Season

AT&T isn't breaking new ground here. Rival Verizon (VZ) initiated a similar policy earlier this year, just as it was introducing Apple's (AAPL) iconic iPhone. "Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95% of data customers aren't negatively affected by the inordinate data consumption of just a few users," Verizon said at the time.

It may seem fair on the surface. Why should the needs of a few data hogs bog down the surfing experiences of the many? Verizon had also seen AT&T's network overcome by Web-happy iPhone users, and the last thing it wanted was to become the ironic subject of its own attack ads.R

However, there is something wrong about having to tack on an asterisk to an unlimited plan.

Where's the Uproar?

If a buffet operator cut off 5% of its heartiest eaters from making another run at the carving station, there would be a groundswell of criticism. If an amusement park manager made 5% of its most active riders stand in longer lines, it wouldn't sit well, not just among coaster enthusiasts.

Why aren't more people complaining about the throttling that is taking place at the country's two largest wireless carriers?

The obvious rebuttal is that consumers do have choices, at least after their two-year cellular contracts are up, if they don't want to deal with stiff early termination fees. We can let the free market decide. If these moves send more customers to Sprint (S) or smaller carriers, AT&T and Verizon will have to change their data-shackling ways.

However, it's not as if there's a plethora of options for smartphone owners outside of AT&T and Verizon. There actually aren't any right now when it comes to the iPhone. AT&T is also in the process of acquiring T-Mobile, if regulators don't flinch.

It gets worse.

New AT&T wireless customers over the past year don't even have the option to go with the freshly diluted plan that was just announced. AT&T stopped offering unlimited data to first-time smartphone buyers last summer. This new policy basically applies to older AT&T wireless accounts that have been grandfathered into the original offerings. As long as they stick with AT&T they can continue to upgrade their phones with the now-restrictive unlimited data plan.

Watch Out Cable Customers -- You're Next

It's not just wireless carriers that are moving toward tiered data plans with caps in lieu of simply beefing up their networks to handle the uptick in traffic.

Internet and cable providers are also wheeling into the weigh stations.

Comcast (CMCSA) -- the country's largest cable company -- began experimenting with usage caps on its popular broadband access service three years ago. Smaller players have followed suit.

Even AT&T has moved to cap the same "unlimited" wired and Wi-Fi connectivity that it was telling smartphone users to rely on so they wouldn't have to be on its mobile meter. It decided earlier this year to top out its originally unlimited DSL data plans at 150 gigabytes of monthly usage. Its U-Verse broadband television customers get maxed out at 250 gigabytes a month.

The ceilings may seem high, but have you checked your consumption habits lately? More media and dot-com giants continue to crank out compelling streamed content. More home theater devices make the video streaming process seamless. Pandora (P) and other music-discovery sites are making it more popular to stream music through mobile devices.

You may not be a data hog now, but you may want to feel for the beginnings of a pig tail in a year or two.

You'll be missed, unlimited data plans. The Internet revolution won't be the same without you.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and AT&T.


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12 Comments

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matthewspacc

I just got slowed down. Now I'm going to sue AT&T. Anyone interested in filing? Contact me at infoyouneed2know@aol.com

November 12 2011 at 4:06 PM Report abuse rate up rate down Reply
johnfla488

If the fcc won't put a stop to these practices, class action lawsuits are in order.

August 05 2011 at 12:22 PM Report abuse rate up rate down Reply
ja43

Now that they got you hooked, they pull this..sounds a bit contrived to me. COMPLAIN TO THE FCC, they should be on this one. What ever happened to a company being ready for what they pushed? I am going back to a simple cell phone and forget all this angst. Not wotht what we pay for it!

August 04 2011 at 10:37 AM Report abuse rate up rate down Reply
Nokia

When its about looking for an all purpose electronic gadget, it has to be mobiles. And Nokia is the name that keeps the mobile freaks amazed with its outstanding featuring products and models. Models with all the latest facilities and features are what Nokia always keeps marinating. A look inside www.rightgadgets.in/items_subcat.asp?Category=Mobiles_India_Online&cid=1&brand=Nokia will give full idea of the Nokia offers.

August 04 2011 at 5:52 AM Report abuse rate up rate down Reply
Sen425

Internet providers that also provide cable are doing this in response to consumer dropping cable and instead watching tv on hulu or other internet sources.

August 03 2011 at 6:07 PM Report abuse +1 rate up rate down Reply
Allen Heffley

Haha, I laugh at Data Plans and Data limits. What is wrong with America, hell what's wrong with everyone? iPOD touch wifi, unlimited download, never ever pay anything extra VS slower 3G, limited data and a monthly fee.

Everyone has Wifi even my Grandma and McDonnalds, Jack in the Box, every hotel, work Wifi is everywhere and it's usually free.

Same reason I would never support Xbox, it's pay to play, you can't even go to facebook or youtube or purchase a subscription to netflix or Hulu without first "paying" for the "right" to do so. $60/year (xbox live) which is $300 every 5 years. And that's on the most unreliable console in history of gaming and way overpriced. $299 for a console with no blu ray, no browser (even Wii has a browser) the only gaming platform pay to play, the only streaming platform pay for right to pay for sub, most unreliable console in history of gaming (RROD, now RDOD on slims) and they even make the consumer suffer in upgrades. Proprietary HDD limited to 250GB that is $130, same with wifi, no wifi (Wii and PS3 has had wifi since launch) no wifi on 360 until the slim that released 1 year ago.

Anyways I also drop my phone too much, busy life. I'd hate to do that with an iPhone. I'd rather have my cheap phone and wifi ipod, coming up wifi PS Vita. Oh yeah baby.

August 03 2011 at 6:04 PM Report abuse rate up rate down Reply
Dr. Glassman

I agree perfectly with the quote from another commenter.
"If my server, “AT&T” starts this crap I’ll quit them in a heart beat."

But know the providers do have the right to modify their service terms (i.e. contract) in the middle of the contract term as long as they notify you.

August 03 2011 at 5:30 PM Report abuse rate up rate down Reply
rini1946

what gets me i can use majic jack for a year for less than i am paying for my phone service. why can a company charge so little and the rest are at such high rates.

August 03 2011 at 5:26 PM Report abuse +1 rate up rate down Reply
Me

While I am generally against wholesale gov't involvement in private business there seems 2 B a conspiracy growing here w/ AT%T snarking up competition and they & Verison freezing out competition. In the "old" days I think they called this a monopoly and subject to anti-trust legislation.

August 03 2011 at 5:05 PM Report abuse +1 rate up rate down Reply
g62ghytr

AT&T, Verizon and any other shyster company that limits data usage can only be controlled by the consumer. If my server, “Verizon” starts this crap I’ll quit them in a heart beat. My contract doesn’t say they have the authority to change my contract in the middle. I quit Verizon in the middle of a contract on a similar matter a couple years ago. If they change services they void the contract, I should have sued them also but I couldn’t stand to stay in the same room the …..

August 03 2011 at 4:59 PM Report abuse +2 rate up rate down Reply