Unlimited data rate plans have been officially off the market for some time, but the reality is that the biggest mobile operators still offer them to customers who insist. We have heard stories of existing customers demanding – and getting – a new smartphone while keeping their grandfathered unlimited data plan, as well as new customers switching to a carrier and getting an unlimited data plan. And consider that in our January 2015 consumer survey, a cool 38% of people said they had an unlimited use data rate plan. While some of these people may be confused, we have seen similar numbers in more recent surveys; it is a pretty safe bet that about one-third of the U.S. subscriber base has an unlimited data rate plan.
And no, not all of these people are with Sprint and T-Mobile US: a significant number are with AT&T Mobility and Verizon Wireless. Of course, the Federal Communications Commission has now decided that unlimited really has to mean “unlimited” both in terms of usage and speed – no more throttling back the network speed for these subs after a specific usage level is reached in the month. And to make sure everyone understands, the FCC is fining AT&T $100 million. While this sounds like a huge amount, in reality it is less than $1 per AT&T subscriber, which is hardly going to break the bank.
We believe that the net result of this action will be the death of the unlimited data rate plan, officially and unofficially. Simply put, the operators cannot afford the network traffic associated with a truly unlimited rate plan in the era of LTE. Third-generation data rates are, of course, much lower and hence it took a longer time for a user to rack up a large usage tab. But with LTE and an unlimited plan, streaming Netflix and Hulu all day long is a reality and is done at the expense of the other users on the network. No one can afford to support this for long, even those operators that officially still offer unlimited. While they may say their networks are fine today, this will not last: The growth in usage is too great.
Once all of the operators decide to dump unlimited, consumers will not be able to “shop around” and threaten their current operator with churn if they do not renew the unlimited plan. In response, it is likely the operators will offer great deals to these subscribers to get rid of the unlimited plan – something like 30 gigabytes per month for $100 to share with the family. (We have 30 GB per month for $130 per month.) In reality, this will suffice for most people. (Although if you have a basketball-watching teenage son, this may not be enough!)
Certainly there will be deals to be done, but the unlimited plan is toast. History. Dead, or at least on short-term life support. It was good while it lasted and it encouraged a generation of consumers to try mobile data, but it has had its day. Welcome to the tiered world!
Iain Gillott, founder and president of iGR, is an acknowledged wireless and mobile industry authority and an accomplished presenter. Gillott has been involved in the wireless industry, as both a vendor and analyst, for more than 20 years. The company was founded in 2000 as iGillottResearch in order to provide in-depth market analysis and data focused exclusively on the wireless and mobile industry. Before founding iGR, Gillott was a group VP in IDC’s telecommunications practice, managing IDC’s worldwide research on wireless and mobile communications and Internet access, telecom brands, residential and small business telecommunications and telecom billing services. Prior to joining IDC, Gillott was in various technical roles and a proposal manager at EDS (now Hewlett-Packard), responsible for preparing new business proposals to wireless and mobile operators.
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