Editorial: New AT&T iPhone Data, Tethering Plans Equal Future Shock

Editorial: New AT&T iPhone Data, Tethering Plans Equal Future Shock 1

Long-time iPhone users know that Apple makes “good news” announcements early in the day, a deliberate step to maximize their exposure, and sneaks less positive ones out when the stock market’s closed or journalists are just about to leave the office. So the fact that Apple’s iPhone partner AT&T announced huge changes to its iPhone and iPad data plans in the dead of night with no assistance from Apple should tell you something: there are major changes afoot, and Apple doesn’t want them to cloud its upcoming unveiling of the next-generation iPhone next week.

In short, AT&T revealed two pieces of potentially controversial news: first, that $30 “unlimited” data plans are going away for new iPhone and iPad customers, and second, that it plans to charge $20 for iPhone tethering. Effective June 7, 2010, the company will cap new users at 2GB of data for $25 per month, and offer a $15 monthly plan with 200MB—the same price as the current low-end 250MB per month iPad 3G plan, but with less data. As marginal as the cheaper plan was for the iPad, it looks even less attractive now, quite possibly to push more users into the more expensive monthly offering. Additionally, AT&T will charge $15 plan users an additional $15 for another 200MB if they exceed that cap, while $25 plan users will be assessed an extra $10 for 1GB more if they exceed the 2GB threshold. In other words, stay within your limits, or you’ll pay $30 per month for 400MB, or $35 per month for 3GB, far worse than the old $30 unlimited iPhone and iPad plans.

Editorial: New AT&T iPhone Data, Tethering Plans Equal Future Shock 2

Initially, our reaction to this news was negative across the board—the first response most users will have. But after we went back and looked at our actual iPhone data usage for the past six or so months, the reality is that there are several current usage scenarios that play out across our editors and their spouses, with almost all of them seeing net positives under the new AT&T data plans.


Editorial: New AT&T iPhone Data, Tethering Plans Equal Future Shock 3

Best off will be this sample user, who according to AT&T’s “View Past Data Usage” chart (see the first page of your AT&T Wireless account page for your own numbers) has never exceeded 200MB per month in usage. Over the seven months charted here, she could have paid $15 per month for data and never faced an overage charge. If her data usage stays the same under the new iPhone, and she doesn’t want to use a computer for tethering on the road, her data bills could go down by 50%.


Editorial: New AT&T iPhone Data, Tethering Plans Equal Future Shock 4

Similarly fine will be this sample user, who routinely uses in excess of 200MB per month but far less than 2GB per month. Over the eight months charted here, he could pay $25 per month for data and never have an overage, with plenty of spare bandwidth for a tethered device. Notably, this user’s last month of iPad data usage amounted to around 325MB of data, which on top of the 277MB of iPhone data is still well below the 2GB cap. Paying $45 per month for tethered iPhone + iPad service—if Apple offers tethered data for the iPad—wouldn’t be great, but it wouldn’t be awful, either.


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Problems start for users like this one, who has months that fall under or above the 200MB and 400MB caps of the $15 plan. In December, she would have had an overage fee of $15 for a mere 18MB of additional data, with a similar $15 overage in May. But in April, she would have paid $45 for 429MB of data versus $30 under the current iPhone unlimited data plan. Over six months’ time, she would have been better off overall on either the $15 plan or the $25 plan than the $30 plan—a non-trivial fact—but her future bills will fluctuate a lot from month to month, and if she has more months like April going forward, the $15 plan could put her in the hole. She’ll need to pick the $25 plan, or get ripped off every month by overages.

Unfortunately, these charts are all based on prior iPhone usage patterns, and bigger problems are sure to come. Thanks to recently-approved 3G VoIP and video streaming applications, iPhones are just now becoming considerably more capable of using data than they were last year, so people accustomed to staying under 200MB may well wind up facing overages in the near future. There’s significant evidence to suggest that the next-generation iPhone will include video chat functionality, as well, though it’s unclear as to whether the feature will be allowed on AT&T’s 3G network. If it is, expect 3G bandwidth usage to race upwards, as video streaming is amongst the most data-demanding features of an iPhone, and during video chat, it’ll be going in both directions. The 200MB and 2GB plans that are borderline acceptable today may well become constraining within only a few months of the new iPhone’s introduction.

Then there’s the iPad. As the massive uptake of iPads over the last two months illustrates, demand for lightweight portable tablet computers is already surging, and the iPad with Wi-Fi + 3G offers a great way to get anywhere access to the Internet. Tethering to an iPhone with existing data service would be the other—and a logical way to let current iPhone customers enjoy using two devices at a modest premium. AT&T’s $20 tethering fee is not modest. It is only available to users who have already purchased the $25 2GB data plan, and then, offers nothing more than the ability to share that 2GB between the iPhone and another device.

Charging a tethering fee is justifiable under an unlimited or near-unlimited iPhone plan. The logic is clear: you’re given “unlimited” iPhone access with the understanding that you’re not going to use 3G data in a truly unlimited fashion on a device with such a small screen, but that changes when you connect a data-hungry computer or a tablet-class device, which will use far more of the “unlimited” service than a phone. Similarly, if AT&T wants to charge a small fee so that two data plan-sharing devices can each have SIM cards, or separate data phone numbers, or something of that sort, fine. Yet under a capped data plan, you’re paying for a specific amount of data per month and should be able to use as much of it as you want without having to answer to AT&T for what type of data it is, or the devices that are displaying it. A $20 fee for the privilege of using your 2GB plan more fully is ridiculous; a lower fee for tethering, or a similar fee with an unlimited plan would have been less objectionable.

Readers, what do you think of the new AT&T data plans? Does the company have some adjustments to make before WWDC next week, particularly in the tethering department, or are you satisfied with what it has come up with? Voice your opinions in the comments section below.

  1. The change in data plans upset me initially but in the long run I don’t think it will impact my usage. I am disturbed by the tethering costs. If I pay for 2GB of data, I should get to use 2GB of data any way I can. The fact that I would have to pay an additional charge to tether is ridiculous.

    I doubt we hear a sniff of this at the unveiling of the new iPhone next week.

  2. Anyone who complains will be labeled “abusers!”

    I think all current owners of the unlimited plan should protest by amping up their data usage today, thereby becoming “abusers”. Let’s crash the network.

    It’s our modern way of standing in front of the tank.

  3. I don’t mind the data caps and their respective prices. My wife and I will also certainly see a net benefit. These plans are going to be good for many people, even if the elimination of the unlimited option sounds bad.

    Where I take issue is with the tethering charge as combined with the new capped-data plans. When coupled with an unlimited data plan, a tethering charge makes perfect sense, as it implies heavier usage. But as an add-on to a data-capped plan, a tethering upcharge makes no technical sense. Under such a plan, the option to tether should be yours to make for free, allowing you to choose how to burn through the 2GB you’re allotted. Overages would be more likely, but that’s the cost that tethering should be.

    Alternatively, the $20 tethering charge ought to include an extra bucket of data. As it is, the charge seems silly, just to flip a switch.

  4. I wasn’t happy with the existing AT&T pricing plans and don’t see much to be happy about with the new plans. I’ve been waiting a long time to get my first iPhone, and this may make me wait even longer. I’d like to compare prices with the other carriers before committing.

  5. Why should it matter if I go through fifty MB of data through tethering as opposed to straight from my phone?
    If anything, I would imagine that if they offered the tethering free of charge, it would drive people to opt for higher priced data plans as well as rack up over usage fees.
    The only answer I can see that makes any sense, is that they are intentionally discouraging the use of their own network. (a network that has proven to be horribly inadequate at delivering the service that customers demand)

  6. AT&T’s wireless network is crap plain and simple.. And for Apple to hobble something, like the Iphone/Ipad, with so much potential by locking it into AT&T is beyond belief. Now AT&T wants us to pay more for the privilege of using their spotty network??

    My contract is up in Oct. and I have to say I’m going to take a long hard look at an Android. It might just be worth using one to get away from AT&T.

  7. I’d save some money, but worry about having to watch my data usage and that my future usage might increase.

  8. grimmbro wrote: “It’s our modern way of standing in front of the tank.”

    Am I understanding your reference correctly? Are you putting your complaining about AT&T’s data fees on the same level as an unknown man who faced down four tanks in response to thousands of students being slaughtered by the Chinese military?

    If that’s the case, then there is _seriously_ something wrong with you.

  9. I’m outraged by the tethering fee. $20 a month to share my capped data? This is another way for AT&T to screw up its customers.

  10. I would actually save money by downgrading to the entry level data plan, as I have been using that much, only occasionally a bit more than 200MB. But the tethering charge is annoying and wrong-headed. Here AT&T basically lied about tethering being ready “soon” for the last year, and then they finally introduce it at the same time they implement data caps. It’s appalling.

    As other commentators have noted online, it’s interesting that rather than invest profits into bolstering their data network, AT&T instead is trying to reduce the amount of data that users consume. This seems ridiculous given their windfall profits thanks to the iPhone.

    I’m really on the fence. Android 2.2 looks very, very interesting, especially with its wi-fi hotspot feature. Depending on costs, I think that could be the way to go. I have loved my iPhones and have a ton of cash wrapped up in apps, but as a questioner at D8 pointed out to Steve Jobs last night, I would like to be able to complete a phone call for the amount of money I shell out every month. That is an attractive reason to consider Verizon.

  11. Overall, I have to say it’s fair. Charging $30 per month unlimited with no less expensive option for low-data users seemed silly to me. Having a low- and a high-tier data plan makes sense.

    I think 200MB is too small — maybe 250-500MB should be the low-end threshold.

    Some other things — first, if AT&T (and pretty much every other carrier) is charging customers for data, then text messaging should be included with that, not as a separate charge.

    Second, tethering should be free if it’s using the limited about of data you’ve already purchased.

    And third, AT&T should offer an unlimited plan, but perhaps at a higher fee for those true power users — maybe $40 for unlimited?

  12. I bought an iPad with 3G based on the thought that I’d have at least a year with the data plan. WTF is this bait and switch BS? I would have gotten the wifi only version… and people wonder why I bash AT7T all the time. There’s always good reason. I can’t wait for Verizon to get the iPhone. I’ll stick with my Verizon mifi for the iPad….


  13. You Americans have had this pie-in-the-sky unlimited plan for too long. Here in Australia no carrier is foolish enough to offer unlimited. I’m on a 250MB plan and thanks to WiFi both at home and in the office, I’ve almost always used far less than that.

  14. I wonder how much data leaving Skype running in the background (to receive calls) will eat up on a daily basis? This hasn’t been possible on a non-jailbroken phone up ’til now (unless you didn’t want to use your phone for anything other than Skype).

  15. I just checked my usage. In the last six months, my highest usage was 102MB. So, it appears I’ll be able to save $15 a month and that’s just fine with me. Now if they’d only offer me a less expensive calling plan!

    I’m not interested in tethering, but I do agree that you should be able to use your 2GB of data however you want without paying extra. Typical AT&T cash grab there.

  16. My big thing is streaming music, which quickly eats up data during several hours of play. OS 4 adds multitasking, which, as demonstrated by Jobs at the OS4 preview, allows for using apps such as Pandora or AOL Radio to stream music in the background while using a different app. Capping the data defeats this if you can’t stream like normal radio.

  17. Aaaaaaand the current amount of jailbroken phones are about to soar. Tethering was the only reason I Jailbroke mine as a pacifier until att got their act together. Now with free tethering and an older 5gb cap I have no reason to go back. I don’t know if Att knows how easy it is to hack a phone, but I will be recommending it to everyone I know, $20 a month is outrageous.

  18. Generally okay with the new limits, based on my current usage. But concerned that as usage changes over time my bandwidth will go up. My wife for example is under 200MB most months, but there is a potential worrying trend upwards that could make switching her to the Plus plan a mistake in short order. Would mean watching more carefully so I don’t wipe out any savings quickly.

    Also, like others, I don’t get the tethering charge as defined. Why don’t they just add another 2GB of data as part of the tethering plan, giving you 4GB? Why does tethering alone cost you $20 and give you no additional bandwidth. Seems like they’re just encouraging us to jailbreak our phones.

    I also find it highly questionable that you’ll only be able to tether computers, not iPads or iPod touches via bluetooth or Wifi. Its obviously possible since more than one Cydia app overs this. And competitors to the iPhone like the HTC Evo 4G or the Palm Pre are offering such features. If I want to use my iPad on the network should I instead choose an Android phone?

  19. As a 3yr veteran 1st Gen iPhone owner…I was looking forward to quite possibly upgrading to the newest iPhone. Today’s announcement however has invariably steered me towards another smartphone solution for my needs.

    I GUZZLE internet usage on my phone. Whether its sport scores, web surfing, YouTube, games / apps that use data, etc…; I simply devour data. Taking away unlimited data plans only convince me that AT&T was and continues to be the worst partnership for this device. Furthermore, if AT&T has shown this much trouble with handling data on its network…share the load. Make the iPhone available to other networks.

    Suffice to say I LOVE my iPhone. But I will definitely be in a Sprint store this weekend considering an EVO 4G purchase. I think AT&T lost their minds a long time ago…and this only cements this notion in my mind.

    They’ve NEVER given a flyin’ fig newton about their customers…the astoundingly long wait on MMS messaging to the tethering debacle that sits in our laps…I’m done with AT&T.

  20. Ok, so I’m not an AT&T customer. I don’t even live in the Untied States. I’m one of those patient Canadians who waited for the iPhone to offered in Canada, and then instantly bought one when it came out up here.

    So here’s the thing. When Apple finally announced that Canadians we going to get their chance to get their hands on a (legitimate) iPhone, Rogers communications (our AT&T equivalent provider north of the border) announced some pretty lousy data plans. Like the new AT&T plans, these plans were capped. In fact, some of them had (have) ridiculously low caps. I think they started @ 100MB!

    Canadian customers were so pissed off that Americans were being offered unlimited data that a petition was started to try and force Rogers to offer the same, an unlimited plan at a fair ($30) price. What we got was a limited time offer of 6GB for that $30, and yes I signed up for that. Then last summer, Rogers got wise and when Apple offered tethering on the iPhone, customer could use that service, free of any additional charge, and any data usage incurred would count towards that months allowed data.

    Now AT&T wants to make the same mistakes as Rogers, and hopes to get away with it? What are they thinking? Who in the world thinks it’s a good idea to offer worse service at a higher price, than was available to consumers in the past. They must think you’re all idiots. (You’re not, by the way). Will these new plans save some (if not many) customers money, absolutely. But, if you’re goal is to offer better value to customers who use less data, then $15 for 250MB (the initial plan for the iPad) is a great way to do that for iPhone customers. But to offer less value (potentially) to your customers than they could get before is flat out insane. Especially when your offer 250MB for 2 months and then decide, “Oh no, that’s too much. How about 200MB?” This is a joke right? Is AT&T actually trying to drive customers away.

    This is the most criticised cellular company in the United States. It’s a down right shame that Apple gets inherently tied into all this bad publicity. After all, it’s really all AT&T’s fault. Some might say, “Isn’t Apple to blame for signing on with AT&T in the first place?” NO! Apple needed a company of AT&T’s size to break into the market of smartphones. In order to compete with the giants like Nokia and Blackberry (who still maintain greater market share than Apple) Apple needed a major carrier to help break into the market, and that came at a price, exclusivity. Verizon wasn’t a viable option because their network isn’t built on the world standard GSM, which would have slowed Apple’s international growth. Unfortunately, Apple has had to take lemons and make lemonade with the iPhone on AT&T’s network.

    So seriously, what is AT&T’s big move here? It almost seems…

  21. I think AT&T is abusing us. They are getting ready to take advantage of the new features that are coming to the iPhone with pricing designed to cause people to be charged more. As it is, their spotty coverage makes it barely work as a phone half the time I try to use it. I think AT&T is going to make other carriers more welcoming. This is just a step backward. Hell, they can’t even offer unlimited talk time that competes with other carriers that do.

  22. I am a longtime *Blackberry* user who has been counting the days for the release of the iPhone 4 to switch over. Now I might not. Here’s why:

    Although AT&T iPhone users have never had “officially sanctioned” iPhone tethering, Blackberry users have. The current AT&T tariffs for Blackberry users are $30/mo for 5gb and $30/mo for 5gb *MORE* for tethering. In other words, if you spend $60/mo you get 10gb/mo in data transfer. The idea that I can lock that in (grandfathering) is very tempting. Conversely, the thought of paying $20/mo extra for *Zero* more data is deeply offensive.

    FWIW… Blackberry users have always been able to tether even without paying for a tethering plan on AT&T (and no “jailbreaking” required). AT&T can’t tell whether the bits and bytes you push and pull are used by a Blackberry or a tethered PC.

    I’ve been salivating for months at the thought of having an iPhone 4, but AT&T has really made me pause. I won’t stay with Blackberry, but I may switch instead to a Droid + Verizon.

  23. All I can say is, Sprint’s Everything Data plan > AT&T any plan after this. I’ll live without an iPhone for now and jump to Android till Apple can get out of this AT&T locked-in nightmare.

  24. How about stop forcing customers in poor quality service areas to foot the bill for the few who are lucky enough to reside in areas with good coverage/fast network speeds?

    They could easily do this by charging a flat (but reasonable, say, one cent) ‘per-megabyte’ rate for data. I would have been willing to live with slow data speeds and so-so coverage if AT&T hadn’t insisted that I pay the same $30/mo for sporadic dial-up speeds that others were paying for 1 Mbps throughput.

  25. The future of the Internet is mobile… Where would the Internet advancements that we’ve seen over the past years be if all of our dial-up plans hadn’t been replaced with these so-called “bandwidth hogging” unlimited him Internet plans? I’d venture a guess that many of the things we take for granted now would have never happened…no Hulu, no Skype, No Flickr, and the list goes on and on… Listening to all of these people whine about how this doesn’t hurt them it helps them…is something akin to folks in the early automobile days cheering the county for tearing up the only paved road because all they ever did was ride horseback anyway. Sure…today this might not bother you…but do you really believe that they will raise these caps or bother to increase their investment in backaul infrastructure to support additional capacity now? Please…there’s no way.

  26. For anyone who’s interested, here’s some approximate ‘per-MB’ comparisons.

    Verizon Mifi= 1.17 cents (5 cents per for anything over 5GB)
    AT&T 2GB= 1.25 cents
    AT&T 2GB+tethering= 2.25 cents
    AT&T 200MB= 7.5 cents

    As you can see, even under the new plans, iPhone owners who use the least amount of data (whether by choice or due to network conditions) are still getting the shaft.

    If the goal is to get us to go easy on the data, how about giving us a real incentive! 

  27. This situation over tethering is reminiscent of when ISPs tried to claim they could limit the number of computers on your home network to some arbitrary number whether you were paying for a capped amount of bandwidth or unlimited. It was a ridiculous cash grab then as now. While some consumers paid the fees, most did what I did and just agreed to the TOS and went ahead and hooked the whole network up to the pipe anyhow. The comments about jailbreaking are spot on – it doesn’t cost AT&T one penny more for you to tether on a capped transfer, so why on earth do they think it should be worth $20, the bulk of what it costs to take my family of 4 out to eat at a modest joint, for something as trivial as tethering?

    As someone said in another thread on this subject, AT&T is abusing their exclusivity. Well, let them keep it up, all it’s going to take is enough PO’d politicians and the cell providers will be looking at the same regulations that removed all the free money grabs from the ISPs – nowadays we pay for the data pipe into our house and what we do with it is our business, and that’s just how it ought to be for AT&T subscribers.

  28. How about this: They remove making the data plan mandatory! I am out of the country for 4 – 6 months at a time. I have to switch my iPhone with a dumb fone to cancel the data plan! I wouldn’t mind the new data plans if I can turn them on and off as needed.

  29. Just signed my wife up on an original iPhone 2G with AT&T.

    It was a catastrophe to get it done, because of Apple Activation Server Difficulties.

    I kid you not, I spoke to perhaps 6 diffy AT&T employees, also emailed our company’s AT&T rep, spoke to 3 or 4 diffy Apple employees, went to 2 diffy AT&T stores, but finally got it hooked up.

    Anyhow, they are more than generous with the plan for the original iPhone:

    Voice is still the $39.95 rollover 450 plan.

    Data is $20 for unlimited with no cap.

    This includes 200 text messages.

    (so, there is a limit on texting, but we are no big fans of texting.)

    Paying that much per month beats standing in front of 4 Chinese tanks any day, and twice on Sunday.

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