Back in March, AT&T CEO Randall Stephenson said he thought the wireless industry would adopt usage-based pricing models for mobile data. He was right. It became a reality in the U.S. as operators grapple with runaway data traffic and how to monetize it.
AT&T Mobility (NYSE:T) fired the first salvo in early June, switching from unlimited smartphone data plans to usage-based plans, offering 200 MB of data for $15 and 2 GB for $25. Users who had unlimited data plans were grandfathered in.
Verizon Wireless (NYSE:VZ) followed suit, introducing a promotional tiered data pricing offering in late October for its CDMA EV-DO smartphones. However, Verizon held on to its unlimited data plan for $30 and added a $15 option for 150 MB of data. T-Mobile USA followed suit days later with its own promotional offering of 200 MB plan for $10 per month with a two-year contract or $15 per month without a contract. T-Mobile also kept its $30 unlimited data plan.
AT&T revealed in December that it has 7 million usage-based mobile broadband subscribers. The carrier counted 33.5 million postpaid integrated devices in its base of 92.8 million total connections at the end of the third quarter. The company claims the lower price points have spurred adoption in smartphone data plans.
Then came LTE. And, as promised, Verizon Wireless launched its 38 markets with usage-based pricing: $50 for 5 GB or $80 for 10 GB with a $10 per GB overage charge. Critics have argued that the blazing fast speeds of LTE means users will drain their data buckets fast.
Despite the dislike of tiered data plans, these packages are here to stay. Wireless executives argue that flat-rate pricing doesn't encourage customers to be efficient in their use of applications, and some folks are just flat out bandwidth hogs, using gigabytes of data per month, which means other customers are subsidizing their usage.
Data pricing in 2010 is just the start of changes in mobile broadband pricing. Already, operators are talking up buckets of data that subscribers can access via a range of devices.