For years, wireless providers have been moaning about their highest volume data users and shaking their fists at the sky for ever having tried unlimited data plans in the first place. But now, with the impending release of a reportedly 4G LTE-compatible iPhone on the horizon, these same carriers are popping champagne corks, hoping that the faster data speeds will nudge consumers into the next level of data hogging.
Studies by various groups, including our cohorts at Consumer Reports, have put average monthly data use for 3G and 4G (non-LTE) users at just around 500MB/month. Meanwhile, the Wall Street Journal says that a study by the folks at Validas peg the average use by an LTE user at 1.2GB/month.
“These new devices and the apps that roll with them are going to drive more data usage,” Verizon CEO Lowell McAdam told investors last week. “As you move off of 3G and on to 4G your usage should go way up and your costs should go down.”
But because carriers often take a loss on selling iPhones to customers at a discount in order to lock them into a new contract or contract extension, the Journal says that each time a new iPhone is released, wireless carriers’ profits take a temporary hit.
This is why Verizon and AT&T each increased their upgrade fees in the last year (to $30 and $36, respectively, for most customers), so when people begin placing orders for whatever is announced by Apple tomorrow, the wireless biggies won’t be hit as badly in the wallet.
These two companies are also banking on the new iPhone as a way to push more of their customers into the new shared data plans and perhaps finally get those who have been holding on to their grandfathered unlimited plans to use an upgrade that will get them into a tiered plan once and for all.
From the Journal:
Verizon Wireless… says it will only sell discounted smartphones to people on tiered data plans, meaning that someone who signed up for an unlimited data plan when Verizon started selling the iPhone in January 2011 will have to pay full price to get the latest iPhone or switch to a tiered data plan.
And as we’ve previously mentioned, AT&T is requiring that anyone who wants to use the FaceTime video chat feature over wireless will be required to switch to a shared data plan.
On the other end of this spectrum (pun intended) is Sprint, which continues to push its unlimited data plans as an alternative to much bigger competitors AT&T and VZW. The company is just now rolling out its LTE network, but — so long as it does not try to play the same tiered data plan game — truly unlimited data plans could become very attractive to people who have no need for shared plans and don’t feel like constantly checking their usage to avoid costly overages. The question is whether or not Sprint can continue to offer unlimited data plans as customers’ data usage increases.