Wireless operators are dusting off an idea from the 3G era and giving it a 5G twist. Both T-Mobile and AT&T have introduced a high-end rate plan that offers unlimited data without throttling or usage restrictions.
T-Mobile was the first to bring this concept back when it introduced its Magenta Max $85 per-month plan back in February. Magenta Max is the operator’s most expensive 5G rate plan and it’s truly unlimited, meaning that T-Mobile says it won’t throttle or cap the customers 4G or 5G data regardless of how much they use. However, the company will throttle the customer’s mobile hotspot data down to 3G speeds if they exceed 40GB of data per month.
AT&T last month followed T-Mobile’s lead and ended its practice of throttling the data speeds of customers on its $85 per month Unlimited Elite plan after they use 100GB of data. But similar to T-Mobile, AT&T will throttle the customer’s mobile hotspot data if they use more than 40GB of data per month.
Verizon has not yet joined the others in this trend. The carrier still throttles data after the customer exceeds 50GB of data, even for its highest priced plan ($90 per month). Verizon also throttles mobile hotspot data after 30GB of data is used.
Is there value?
Do customers really value unlimited data? A June 2021 Ericsson Mobility Report found that in North America the average monthly mobile data usage per smartphone was just about 11 GB, which is well under the 40GB or 50GB that often triggers the operators to throttle speeds. Only users that stream a lot of video or music to their phones come close to surpassing that amount. But experts say that consumers will start using a lot more data in the coming years as more and more data-intensive applications become mainstream. Ericsson’s report predicts that the averaged smartphone data usage will reach 48GB per month in just five years thanks to applications like augmented reality and virtual reality.
Perhaps AT&T’s Unlimited Elite users and T-Mobile’s Magenta Max customers are taking advantages of the other perks that are included in these high-end plans. AT&T’s Unlimited Elite is bundled with HBO Max and Stadia Pro gaming. Likewise, T-Mobile’s Magenta Max plan comes with a Netflix subscription.
And early indications show that consumers find these high-end unlimited data plans appealing.
T-Mobile CEO Mike Sievert said during the company’s second quarter earnings call with investors that the company is seeing a lot of adoption of Magenta Max, which he called a “differentiated product.” And those Magenta Max customers are consuming more data too. During the company’s first quarter earnings call with investors Sievert said that they are consuming 40% more data than other 5G customers and a whopping 70% more than the average LTE user. In addition to video and music, Sievert said that these Magenta Max users also have higher social media engagement.
AT&T, meanwhile, just started offering its Unlimited Elite plan without throttling last month. However, during the company’s second quarter earnings call with investors, Jeff McElfresh, CEO of AT&T Communications, said that the company is getting a positive response to its unlimited plans and is working on upgrading its existing customers to 5G devices.
Not a new concept
The concept of unlimited data dates back to the 3G era when operators used all-you-can-eat data plans as a competitive differentiator to get more people on their 3G networks. However, they pulled back on those plans when network usage became constrained thanks to the popularity of the iPhone and other smartphones.
Today T-Mobile and AT&T appear to be using that same strategy by offering an unlimited bucket as a lure to get more users to upgrade to 5G and take advantage of these new networks. Verizon, meanwhile, has nationwide 5G coverage using dynamic spectrum sharing (which isn’t considered much of an improvement over 4G), and limited coverage using its 5G millimeter wave spectrum. The operator may be waiting to deploy 5G in its C-band spectrum before it matches T-Mobile and AT&T with a similar unlimited data offering. That C-band spectrum is considered the sweet spot for both providing capacity and coverage.
T-Mobile and AT&T customers that make the leap to unlimited 5G with Magenta Max or Unlimited Elite will likely enjoy the benefits of no throttling or data caps for some time. But if history is any indication, it won’t last forever. When average 5G data usage starts to creep up into the 40GB or 50GB per month range, I think we’ll see a return of the throttling.