10 things you should know about AT&T's new smartphone data plans

Yesterday, I was talking with The Loop's Jim Dalrymple about AT&T's data-capped plans. Like other long-time iPhone users, he didn't seem too concerned after looking at his data usage. I gave him three reasons why AT&T changed to capped plans, to which he asked: "So did you write about that?" No. I had written a long post about AT&T's timing tactics but nothing really that succinctly explained why. So here I'll give five reasons why AT&T changed the data plans.

But first a little preface. Many long-time iPhone users -- at least those with high Net visibility -- don't seem so concerned about the new AT&T data plans. Yeah? Well, that's an easy position to take when you're not affected. You long-timers get to keep your unlimited data plans. Starting June 7th, everyone else is capped at 200MB or 2GB, depending on how much they're willing to pay. Many people on the new plans will carry a psychological burden: How much data did I use this month? I agree with Spencer Ante, who wrote yesterday at Wall Street Journal: "AT&T's pricing shift will test behavior." Keeping that in mind, this post will be two lists of the fives. The other: Suggesting ways AT&T should make the plans better for customers.

Five reasons why AT&T is moving from unlimited to metered smartphone data plans:

1. The network is over-congested. Too many AT&T subscribers complain about dropped calls even when they have four or five bars signal strength. Increased data usage leads to congestion at the towers, which can't handle the load of connections. Something has to give -- hence, the dropped calls. By capping data usage, AT&T hopes to contain growing data usage, especially as it offers more smartphones (See. No. 4).

2. Currently, most AT&T smartphone users don't consume much data. The carrier claims that "65 percent of AT&T smartphone customers use less than 200MB of data per month on average" and "98 percent of AT&T smartphone customers use less than 2GB of data a month." Over the last couple days, many iPhone user bloggers have confirmed these numbers. Skip to No. 5 for reasons why those numbers are meaningless.

3. AT&T wants to increase smartphone adoption -- and not just iPhone. Lower data pricing, particularly the $15/month plan, removes a barrier to buying smartphones. If data usage is as low as AT&T claims, the $15 plan should open up more sales. I have to credit Business Insider for this one. Dan Frommer nailed it: "AT&T's New Smartphone Plans Could Send iPhone And BlackBerry Sales Through The Roof."

4. AT&T offers more smartphones -- and data is compulsory. By my count, at AT&T's Website, 18 smartphones are available for purchase, including three iPhone models (the number doesn't include refurbished handsets). On Sept. 6, 2009, AT&T made data plans mandatory for smartphones. My guess: the $30 unlimited fee hurts smartphone sales. Rather than remove the mandatory data plan, AT&T is scaling back data plans to make them more affordable. So, related to No. 3, AT&T isn't just looking to drive up smartphone sales as it introduces new models -- one being the new iPhone -- but remove a sales barrier placed by the $30/month plan.

5. iPhone OS 4 will dramatically spike data usage. The new operating system will allow more background applications to run. Then there is that forward-facing camera from the stolen iPhone prototype. Already, AT&T offers video messages, a feature not really advertised. If the new iPhone has the forward-facing camera and AT&T allows video messaging, data usage would hugely spike. But usage would be even greater if iPhone users can make video calls.

Something else: There are rumors Apple may make MobileMe free. If the $99/year price is removed, many more iPhone users will use MobileMe, which would increase background data traffic. Individually, the data syncing wouldn't consume much, but it would be a significant extra load in aggregate. The new data caps introduce a psychological barrier to data consumption; people worried about using too much data will limit or turn off background services.

Five changes AT&T should make to its smartphone data plans:

1. Do away with compulsory data plans for smartphones. Not everyone wants to use the mobile Web. BlackBerries and other QWERTY keyboard smartphones, like the Nokia E71x, are popular for texting. Let smarphone users who only want unlimited texting to have that option. As backup, offer them metered data with a 200MB limit and $15 cap.

2. Offer rollover data. AT&T offers rollover minutes, why not rollover data? If data usage is as low as AT&T claims, then let subscribers carry unusued data forward, even if just for three or six months (It's 12 months for voice).

3. Bring back unlimited data. Some customers will pay more for the peace of mind or for data need. AT&T should offer an unlimited plan for $40-$45, throwing in unlimited texting as a bonus. iPad users should get unlimited data for less -- the originally promised $30 a month (See No. 5).

4. Offer unlimited data with tethering. The plan doesn't have to be cheap, but it should be available.

5. Make application store data usage free. Subscribers can call voice mail or customer service without using up minutes. Let smartphone users shop their local applications store without using up their data allotment. For smartphone users, apps won't consume much data, but the option would remove a psychological barrier that could hurt application sales. For iPad users, the free data usage would matter. Isn't the new Wired iPad app a 500MB download -- or more than twice the limit of AT&T's $15 data plan? For that matter, updates to media-heavy apps should be free, too. If Apple wants to drive up eBook usage, iBooks store should be free of data charges as well.

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