Wireless Carriers Banking On New iPhone To Turn Everyone Into Data Hogs

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.

New iPhone: Carrier Cash Cow?

Comments

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  1. kosmo @ The Soap Boxers says:

    I definitely need to pull my Newton out of storage. Tempted to walk around with it pretending it’s the iPhone 6.

  2. Blueskylaw says:

    1). Companies complain about data hogs
    2). Companies come out with more data hogging equipment
    3). Companies don’t upgrade system to handle this extra business
    4). Companies raise rates due to limited supply of “scarce resource”
    5). Companies profit handsomely
    6). Rinse, lather, repeat

  3. Evil_Otto would rather pay taxes than make someone else rich says:

    Choke on it, AT&T. You can have my unlimited plan back when you pry it (and my phone) from my cold dead hands.

    • HeadsOnPikes says:

      Or when they tell you that you can’t have it anymore after your contract expires (if it hasn’t already, my contract was last renewed when the iPhone 4 came out in the summer of 2010, so mine has expired). They’re under no obligation to offer grandfathered data after that point. It certainly sounds like AT&T is going to let grandfathered users keep the unlimited plan with the iPhone 5, but they don’t have to.

      • StarKillerX says:

        Personally I’ve always been amazed that they allowed people to keep unlimited data plans when moving to a faster wireless system such as 4G.

  4. menty666 says:

    It seems like a good way to punish AT&T. Buy the phone from Apple directly to take that money from them, then keep your current data plan. “Oh, they’ll have to buy it from us if they don’t want to upgrade *muah ha ha h* what? There are other places to get phones?!?!”

    • Velifer says:

      Then they just catch you when they do a network sweep and sign you up for a new mandatory data plan anyway.

    • NeverLetMeDown2 says:

      AT&T would be fine with that. You’d be paying full price for the plan, but not getting a subsidized price on the phone.

  5. JohnDeere says:

    when someone gives me $20/month unlimited any device access, then im in. im not ever going to pay twice for the same internet.

  6. Invader Zim says:

    ok, that picture has been used before…..

  7. DouglasQuaid says:

    Or you can be like me with 5 lines on their account… I am the only with unlimited data. I’ll upgrade an eligible line and renew the contact on THAT line. Then i’ll do a device swap from that line to mine. (I actually may just cut down my MicroSIM and ‘swap’ it myself, as i currently have a 4G Device). This is currently the only loophole to getting a discounted upgrade….

  8. Delicious Spam is delicious says:

    WANT NEWTON

  9. dush says:

    You can get a wireless router and connect any number of devices to one Internet connection for no extra charge. So why do the carriers need to charge you extra for each device you want to add to your wireless broadband data plan?
    Pure profit.

  10. Libertas1 says:

    Fear my Zoomer PDA, Newton!

  11. BurtReynolds says:

    Hence why I bought an S3 on Verizon to burn my last upgrade with unlimited. When I did it the Verizon people tried telling me I don’t use that much data and the new plans will be great. I told them I had an old phone with no apps (Palm) so it is no indicator of future use. Sure enough, I used 3gb last month. No wifi at the office. Most tethering either. Just “legit” data.