AT&T’s days of unlimited wireless data plans for smartphone customers officially end June 7th when the company launches new wireless data plans that all come with usage caps attached:

• DataPlus $15 a month and limited to 200 megabytes  of data.  If you exceed it, your overlimit penalty is $15, good for an additional 200 megabytes.
• DataPro $25 a month gets you just 2 gigabytes of data.  The overlimit penalty for those exceeding it is $10 which buys an additional 1 gigabyte of usage.

AT&T Smartphone customers will also be able to add tethering under the $25 DataPro plan for an extra $20 per month, with DataPro’s usage allowance applied.

Current AT&T customers can remain on their current unlimited Smartphone data plan indefinitely, even if they change or upgrade phones according to AT&T spokesman Mark Siegel.  That concession probably helps AT&T preserve anticipated demand for next week’s new iPhone launch.  Without it, customer demand could be tempered by the realization a phone upgrade could cost you your $29.99 unlimited usage plan.  If you were considering getting an AT&T phone with unlimited data, you have until June 6th to sign up for service under that plan.  After that date, you’re out of luck indefinitely.

AT&T is promoting the end of unlimited wireless broadband as a benefit to customers, claiming that 98 percent of its Smartphone customers use on average less than 2GB of data per month.  But that represents today’s usage.  AT&T’s decision to eliminate an unlimited option they claim 98 percent of their customers never exceeded would be curious without understanding the next generation of Smartphones will provide dramatic improvements in high bandwidth video streaming that will dramatically start eating into those low usage allowances.  The company’s next generation of faster wireless broadband will also include low limit plans, which makes them untenable as a home broadband replacement for all but the most casual users.

For new iPad customers, the $25 per month 2 GB plan will replace the existing $29.99 unlimited plan. iPad customers will continue to pre-pay for their wireless data plan and no contract is required. Existing iPad customers who have the $29.99 per month unlimited plan can keep that plan or switch to the new $25 per month plan with 2 GB of data.

AT&T offers up the common practice of boasting about how much you can do with a usage-limited account, based on the thousands of e-mails you'll never send, the 500 pictures you'll never take, or the 20 - one minute YouTube clips you'll never watch. Notice they never seem to include figures for streaming multimedia applications like music, movies, and TV shows or playing more bandwidth-intensive games. To do so would only upset customers further.

AT&T says customers can continue to use unlimited amounts of data when they access it over the company’s Wi-Fi network hotspots.

Wall Street is happy with AT&T’s elimination of unlimited plans, sensing higher profits and reduced costs will follow.

“The new plans appear well designed to reduce undue network stresses,” Craig Moffett, an analyst at Sanford C. Bernstein told The Wall Street Journal.

Analyst Philip Cusick at Macquarie Securities also told the Journal AT&T may see lower growth in data revenue in the short term as a result of the new changes, but will gain leverage over the heaviest data users, improving its ability to manage its network and charge for capacity. Tiered plans may also pull more customers into data plans, he said.

But because current customers can choose to remain on the grandfathered unlimited plan, existing heavy data users accused of chewing up AT&T’s wireless network can continue to do so as long as they remain customers.  AT&T will only be capping future customers who sign up on or after June 7th.

For those outraged by AT&T’s decision, fleeing to Verizon Wireless for unlimited data may not be an option for too much longer either.

Verizon Wireless Chief Executive Lowell McAdam indicated in an interview with the Journal last month that he, too, is looking at pricing based on use.

“The old model of one price plan per device is going to fall away,” McAdam told the newspaper, adding that he expects carriers to take an approach that targets a “bucket of megabytes.”

One company that doesn’t plan to end an all-you-can-eat wireless data buffet is Sprint, which now sees its unlimited data plan as a potential marketing asset.

A Sprint spokesperson spoke the words you were already thinking:

“We’re giving customers a better value. With data usage growing, customers don’t want to worry about going over their limits.”

Some customers upset that AT&T only sold an unlimited plan welcomed the lower cost options because they didn’t spend a lot of time using the data features of their phones, but several wondered why the company didn’t simply introduce lower cost options -and- leave the unlimited plan in place for those who wanted it.

Overall, AT&T is getting an earful from angry customers over the announcement — even those who don’t exceed 2GB per month.  They sense greed and overcharging.   A sampling:

If 3% are using data “a lot” now, then in another two years, it’ll be 15% and then 60%. Simply put, this is gouging customers, where pricing is decided by dudes in a board room looking at charts and graphs and sales numbers, figuring out how to gouge people for maximum profit.

Obviously AT&T is killing the unlimited plan to cut down on usage and to raise their profits. I also believe it is heavy handed to eliminate the unlimited access plan. If anything, offer other plans and raise the price of the unlimited plan. It will be interesting to see of the other players follow suit and also kill their unlimited plans (can you say “price fixing”? Sure you can!).

AT&T is always full of good ideas, like that Microcell thing. Hey, we can’t give you good service you paid for, so we are going to ask you for more money for this piece of equipment to supplement the service you are not getting.

Just another greedy ploy to make more money. They are selling air. The charges are ridiculous and this is one industry that should be under government control.

My spouse and I pay half of what AT&T would charge us for excellent Palm smartphones on Sprint. We also get turn-by-turn GPS included–something AT&T AND Verizon both charge extra for. Sprint’s network is top-notch. I can’t fathom why people continue to waste money on Verizon and AT&T.

If you’ve got a smartphone or you tether your computer, you really have no idea how much bandwidth your device is consuming. Even worse (or better if you are the phone company) customers can’t control the bandwidth that their devices consume. How often does your email client check for new messages? Can you even stop your computer from downloading a security update? What about that last application you installed, can you stop it from calling home every time you launch it? Do you even know that it does track and report your usage? That’s a huge difference between phone services and data services. You KNOW when you’ve dialed a number and talked for 10 minutes. You can’t control all the data consuming applications and services on your devices… and trying to bill customers for something that they can’t control the usage or cost must be illegal. Surely someone will address this problem soon. Surely.

[flv width=”576″ height=”344″]http://www.phillipdampier.com/video/CNN ATT Goodbye to unlimited data 6-2-10.flv[/flv]

CNN Money reports on AT&T saying goodbye to unlimited data plans for iPhones and iPads.  (1 minute)

The CTIA is the wireless industry's lobbying group

While the phone and cable companies attempt to fight off broadband reclassification at the FCC, the wireless industry has been pulling its own weight in an effort to convince legislators everything is wonderful in wireless, and no consumer protection regulations are necessary.

The CTIA, the wireless lobbying group, has been blogging on overdrive lately, trying to sell the idea Americans are already soaking in broadband options and competition that keeps prices low and innovation high.  Why regulate an industry that isn’t broken?

If only it were true.

While Americans in larger communities do have choices for broadband, for most it’s a matter of picking the phone or cable company for service.  That’s called a duopoly.  In the wireless marketplace, it’s hardly much better.  The nation’s largest wireless phone companies, AT&T and Verizon, have essentially colluded with near-identical pricing and service plan requirements that demand customers add mandatory “options” like data plan add-ons that raise wireless bills higher than ever.

The smaller providers eke out an existence mildly competing over pricing, but with their inherent coverage limitations or history of providing poor customer service, many consumers won’t consider doing business with them.  Relying on most wireless providers for broadband threatens the kind of huge bills you see on TV news reports, as carriers limit consumption to 5GB per month, and most charge enormous overlimit fees to customers exceeding the limit.

The Federal Communications Commission recently found one in every six Americans suffer “bill shock” syndrome — that all-too-familiar panicky feeling when you open a cell phone bill and discover an extra zero on the end of the dollar amount due.  More than a third of people who experienced bill shock said their bills jumped by at least $50 — around 23 percent said the increase was $100 or more.

Settles

That amounts to more than 30 million Americans, but the CTIA’s “see no evil, hear no evil” blog carries on claiming life is good for wireless consumers.  Besides, writes Steve Largent, president of the CTIA, consumers who took their complaints to the Better Business Bureau had them resolved 97.4 percent of the time.

Of course, that begs the question why consumers had to approach the BBB about their poor service experience in the first place.

I’m not the only one asking questions.  Craig Settles, an industry analyst, co-administrator of Communities United for Broadband and author of the report “Fighting the Next Good Fight: Bringing True Broadband to Your Community,” is also pondering the industry campaign to block broadband reform.

Settles penned a piece in today’s Roll Call exposing the fallacies from the industry’s PR machine:

The state of broadband — for consumers, businesses and nonprofits — isn’t the rosy picture the industry powerhouses attempt to paint. Ignoring this reality can lead to bad policy decisions and bad legislation.

[…]

Most states may technically have 60 to 80 Internet access providers. However, in practically every state, the combined statewide market share of all but the top five or six providers might total 5 percent, if you’re lucky. In at least half of the states, data show the combined market share of the top two providers ranges from 70 percent up to 95 percent. That represents near or actual duopolies, most often with one wireless and one cable provider as the undynamic duo.

Life at the local level, which is where your true subscriber options exist, further challenges the industry’s claim that people have choices. If you count “having choices” as living in an area where several companies advertise broadband service, or consider dial-up speed as broadband, OK.

But go door to door in rural counties and small towns. The reality you often find is one major carrier providing fair to poor service to some and no service to the rest, plus some small local providers with 2 percent or 3 percent market share struggling to provide decent service in the face of endless efforts to smite them from the planet. If you’re in one of the few states with four or five providers that each have statewide market share of 8 percent to 15 percent, it’s likely each provider is concentrated in a portion of the state, creating a local reality that’s worse than state statistics.

Settles notes that claims of “billions invested” only invites more questions about what carriers are doing with all that money.  Settles questions whether its wise to brag about spending $20 billion on infrastructure costs when municipal broadband projects in states like North Carolina, with IT staffs of fewer than 12, have built superior networks delivering 10 times the speed of its competitors.

The CTIA loves to tout the innovation wireless providers bring to customers, but in many cases they are claiming credit (and often getting a cut in the action) for someone else’s innovation, especially from the third-party apps market.

Too often the real innovations in wireless broadband have often come in spite of carriers that have sought to block, control, or “manage” someone else’s vision.

[flv]http://www.phillipdampier.com/video/Freedom CTIA Ad Spot 5-2010.flv[/flv]

Watch as the CTIA wireless lobby tries to sell Americans on wireless innovation, much of which didn’t come from wireless companies at all.  (1 minute)

WTTG's "Ask Allison" segment answers a question about unwelcome mandatory data plans

Ever wonder why your cell phone bill seems to keep increasing when you renew your contract?

American wireless phone companies have discovered that subjecting an increasing percentage of customers to required data plans can create a revenue bonanza for companies, whether customers use many data services or not.

Many customers are just learning of new, mandatory data plans now required by all four of the country’s major carriers.  Verizon, AT&T, Sprint, and T-Mobile now compel customers upgrading to new “smartphones” — designed to be used for accessing online services — to also choose an extra add-on plan to cover their data usage.  In some cases, that can add an additional $30 a month to monthly cell phone bills.

Some Verizon customers have learned about this the hard way when they tried to buy a new phone at the end of their two year contracts.  For those longstanding Verizon customers grandfathered on service plans developed five or more years ago, being forced to switch to one of Verizon’s current plans carries quite the sticker shock, especially for those who only occasionally send text messages or use data features.

The insistence by Verizon that Smartphone owners commit to their $29.99 unlimited data usage add-on plan adds considerably to monthly bills.  Many Verizon customers don’t care about increasing sizes of calling allowances — Verizon customers already enjoy free night and weekend calling and free calls to other Verizon Wireless customers (of which there are many — Verizon is now the nation’s largest wireless provider).

Here is a comparison between two near-equivalent Verizon Wireless calling plans, ones from 2005 and the other currently in effect.  There is a dramatic difference in pricing, particularly for those who would find a 250 text message allowance, and data usage counting against your minutes allowance more than sufficient to meet their needs:

AMERICA’S CHOICE II FAMILYSHARE PLAN (2005)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, MOBILE WEB – WEB USAGE COUNTS AGAINST MINUTE ALLOWANCE

Additional features

250 MESSAGE TEXT PLAN, INCLUDING TEXT AND VIDEO ($5 PER MONTH)

NATIONWIDE FAMILY TALK & TEXT SHAREPLAN (2010)

Plan Details

Promotion details

UNLIMITED N&W MINUTES, UNLIMITED VERIZON-TO-VERIZON CUSTOMER CALLING, UNLIMITED TEXT, PICTURE, AND VIDEO MESSAGING

Additional Features

REQUIRED UNLIMITED DATA PLAN (SMARTPHONE) ($29.99 PER MONTH)

Before taxes, fees, and surcharges, Verizon Wireless customers holding onto their legacy FamilyShare plan from 2005 would pay $65.00 per month for two lines sharing 700 minutes of calling, with one line also getting 250 text, picture, or video messages, and a data plan that ate from your minutes allowance, instead of charging you per megabyte.

Today’s plan costs far more — $129.98 — more than double, for most of the same features.  The only difference is that Verizon Wireless doesn’t presently limit your data usage or messaging on their SharePlan.

No wonder consumers are getting sticker shock when upgrading their phones.  The paradigm shift to a “required data plan” forces customers away from older service plans onto new ones.  The result is a much higher monthly bill.

All this and the same companies that have figured out how to effectively double your cell phone bill in five years are also contemplating taking away the “unlimited” part of the required data plan.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WTTG Washington Is It Legal to Require A Phone Data Plan 5-7-10.flv[/flv]

WTTG-TV’s “Ask Allison” feature recently answered a question from a viewer who just discovered the “mandatory data plan” as an unwelcome part of her new phone purchase.  The Washington, D.C. viewer wants to know if that’s legal.  Allison educates viewers in the nation’s capital that isn’t the only trick or trap cell phone companies have in store for you.  Bottom line: maybe you don’t want that new phone after all.  (3 minutes)

AT&T has discovered marketing gold.  What do you do when you run one of America’s worst-rated mobile networks — the one that drops your calls, doesn’t provide uniform reception and is often woefully overloaded — and don’t want to spend what it takes to upgrade?  How about developing a “Home Cell Tower” device that helps solve AT&T’s problems, but adds to yours by charging you $150 for the privilege of owning one.

AT&T’s 3G MicroCell shouldn’t need to exist.  If AT&T had reliable coverage, nobody would need to own a device that helps their bottom line far more than yours.

The MicroCell is sold to customers who are stuck walking their AT&T mobile phone over to the nearest window in order to get a signal from AT&T.  The unit, manufactured by Cisco, plugs into your home broadband connection and effectively creates a tiny “home cell tower.”  Suddenly, you now have five bars of reception indoors and can make and receive calls and reliably use the data features of your smartphone.  AT&T effectively moves your service off their own congested, weak-signal mobile network,  and routes everything over your Internet connection instead.

AT&T 3G MicroCell

It’s a win-win for AT&T.  They get to charge you a substantial markup for a device that costs far less than $150 to manufacture and reduces the urgency to commit to needed upgrades to solve congestion problems.

But AT&T’s marketing department has also figured out a way to earn an even bigger bonus along the way.

Customers who do not choose a special added-cost AT&T MicroCell add-on plan (a ludicrous $19.99 per month plus a $1.25 monthly bill-padding-“regulatory recovery fee”) will be shocked to discover AT&T deducts minutes from your calling allowance even when using the MicroCell to provide you with service.  It takes a special kind of nerve to charge customers for making and receiving calls that don’t even use the company’s mobile network.  It’s like AT&T setting up a kiosk in front of the nearest Verizon payphone and charging you $1 for the privilege of paying Verizon 25 cents to make a call.  The $20 a month add-on plan doesn’t even cover data usage, which means AT&T charges you for accessing data and text messages sent and received over your own home broadband connection.

The Associated Press reviewed AT&T’s 3G MicroCell and seemed unimpressed.

Despite marketing claims it will deliver more bars in more places within 5,000 square feet, the AP found the MicroCell only managed a less impressive 40 feet. AT&T admits concrete or brick walls can also reduce coverage. For all practical purposes, don’t expect the device to provide much help out in the yard.

AT&T also claims MicroCell users can initiate calls from the MicroCell and have them “seamlessly” transferred to AT&T’s mobile network when they walk out of range.  The AP found more times than not, AT&T simply dropped the call, forcing the customer to start a new call.  Even worse, customers initiating a call on AT&T’s mobile network will find the MicroCell can’t take over when they arrive home, making the primary reason for getting the device irrelevant the moment you walk in the door and risk dropping the call.

The only good news is that introductory promotions can knock down the upfront price.  Customers committing themselves to the $20 MicroCell add-on calling plan qualify for a $100 rebate when purchasing the MicroCell.  If you also sign up for new AT&T DSL or U-verse service when buying the MicroCell, you can get an additional $50 rebate, effectively making the MicroCell free to own.  AT&T broadband customers will also get $10 off the MicroCell add-on calling plan.

There is nothing inherently wrong with offering customers these devices, known in the industry as femtocells, but companies like AT&T should be providing them at-cost and be grateful when customers use them.  Instead, the company treats these customers as nothing more than another profit center, ripping them off with a ludicrously priced add-on calling plan to avoid watching call allowances erode away, even when calls don’t travel over AT&T’s mobile network.

[flv width=”586″ height=”310″]http://www.phillipdampier.com/video/ATT MicroCell Demo.flv[/flv]

This video covers how AT&T markets their MicroCell device and accompanying add-on plan and also includes a brief tutorial on how the device works.  (4 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/AP ATT’s Home Cell Tower Delivers an Added Cost 5-5-10.flv[/flv]

The Associated Press reviewed the AT&T MicroCell and ultimately wondered why customers had to pay for a device to improve service you already pay to receive.  (2 minutes)

[Updated 2:30pm — Coverage area correction made.]

Coming this June, Vodafone will introduce an Internet Overcharging scheme for its “pay monthly” mobile customers, dropping “unlimited” smartphone broadband service in the United Kingdom.

From a post on the company’s support forum:

We are planning to introduce Out Of Bundle charging for Pay Monthly customers from 1st June 2010. The reason we’re introducing these charges is to make it fairer for everyone, and to protect our network from data abuse. We’re introducing a real-time notifications service to be completely transparent about these charges and keep customers in control of their spend. No Out Of Bundle charges will happen this month but they will take effect from 1st June. The messages you’ve received this month were sent in error and no more will be sent out from today.

The charging will be as follows:

Monthly bundle customers will pay £5/$7.43 for every 500MB after the first 500MB
Customers without a monthly bundle will pay 50p/$0.74 for every 10MB after the first 25MB

Whilst you’ve all previously been used to there not being any Out Of Bundle charging, the current information available online is clear in explaining that we could introduce such charging at any time. The Vodafone Mobile Internet costs page does state:

We’ll keep an eye on things and let you know your options if it looks like you’ll go over your 500MB Flexi or Value Pack limit.

Our Pay Monthly Terms and Conditions already state that we reserve the right to charge for any usage beyond the Fair Usage limit.

At the same time Vodafone wants to punish customers for using their phones too much, the company continues to heavily market the very phones capable of  “data abuse.”

In addition to the iPhone, Vodafone now also sells a handful of Android phones — both of which are designed for their data service capabilities.

For consumers who believed Vodafone’s marketing and bought an iPhone or Android phone with an unlimited data plan, the rug is about to be pulled out.  Come June, those exceeding Vodafone’s arbitrary data allowances will begin receiving SMS text messages warning them their bills are about to rocket sky-high from excessive usage charges.