The Good, the Bad and the Ugly of Unlimited Wireless Plans

by Gaurav Kheterpal on November 23, 2010

Though telecommunications executives are leaning towards ending flat-rate data plans and moving more towards tiered pricing, customers still prefer unlimited data plans over usage-based pricing plans even if it means paying more. These are findings of a recent survey by Wall Street research firm Sanford Bernstein which confirms that unlimited plans are one of the crucial factors affecting carrier loyalty in today’s highly competitive wireless market.

While unlimited-use plans have been around for a long time now, there’s a growing concern amongst the consumer fraternity that these offerings might soon be a thing of the past. Having enjoyed the benefits of “unlimited” plans, I truly appreciate those concerns. However, should the introduction of “tiered pricing” signal the end of unlimited plans? I don’t think so.

As per the survey conducted by Sanford C. Bernstein and Co., 58 percent of low-end data users in the U.S. said they would change carriers to get an unlimited data plan. For the heavily data-centric user population, nearly 67 percent are willing to sacrifice customer loyalty for the sake of unlimited plans. Most consumers have a negative opinion on usage-based pricing and would rather overpay for an unlimited plan. The survey also spells trouble for carriers such as AT&T which were quick to kill their unlimited wireless data plans amidst public backlash earlier this year. The carrier allows existing customers to stick with unlimited pricing until they change their device and offers two tiered pricing plans for new devices- $15 for 200 MB and $25 for 2 GB.

And it’s not AT&T subscribers who are concerned about the elimination of unlimited data plans. There’s no shortage of Verizon subscribers who are waiting for the Verizon iPhone and all set to jump ship, but are raising their concerns about the possibility of Verizon pulling the plug on unlimited plans. The carrier currently offers 150 MB of data for $15 per month, in addition to its existing $30 per month for unlimited data. On the contrary, Virgin Mobile launched a no-contract unlimited data plan  in August this year to signal its aggressive intent. Our fellow blogger Matt Klassen believes that the move is “both aggressive and well-timed, as it’s sure to challenge the big mobile players who have all but scrapped their own unlimited data plans.”  and I couldn’t agree more on that.

Though wireless carriers have maintained that tiered-pricing is more cost effective from the customer’s point of view, there are other lesser-advertised reasons for advocating the death of unlimited plans. First, carriers want to do away with the network strain from heavy data users who are taking advantage of unlimited usage. Second, they find it easier to attract new users to data services with lower-priced bundles. It’s well known that AT&T has found it difficult to cope up with additional bandwidth demands ever since the iPhone was launched. The situation got worse when the iPad was launched despite the carrier pumping in several billion dollars to rectify the situation.

As an avid smartphone user and an internet junkie, I love unlimited data plans. I hold nothing against tiered-pricing plans either. However, I’d prefer to have a “choice” and decide what works best for me rather than being forced to adopt a tiered-pricing plan in the wake of “consumer interests”. What do you think? Is tiered pricing the need of the hour? Have unlimited data plans outlived their expectancy? Please share your opinion by leaving a comment below this post.

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Written by: Gaurav Kheterpal. >. Follow > by: RSS>, Twitter >, >, or Friendfeed >

{ 1 comment }

Teresa November 27, 2010 at 7:02 pm

Most definitely agree with everything you said. I recently switched carriers from Verizon to AT&T to get my iPhone. I LOVE my iPhone but recently found out AT&T does not offer a Unlimited usage plan. i am on my phone and using it all my waking hours and was unpleasantly surprised when i received a text telling me i was very close to my limit for data usage. If Verizon does get the iPhone ? YES, i will be jumping back to them.

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