Smartphone Data Shake-Up: The End of 'Unlimited' Plans
Americans like living large. We have all-you-can-eat buffets and all-you-can-stream entertainment. And until recently, we had a virtually unlimited trough of mobile data to digest on our always-available smartphones.
At this point, though, all but one of the major U.S. carriers now limit smartphone data usage in one way or another. AT&T and Verizon charge if you go over your allotted number of bytes, while T-Mobile slows your speed down to a crawl once you've crossed its carefully measured line. Only Sprint continues to offer truly unlimited data plans to new subscribers. (Some lucky users on the other networks are still grandfathered in to unlimited plans; we'll see how long that lasts.)
"This trend is happening all over the world," says Thomas Husson, a mobile analyst at Forrester Research. "Carriers need to monetize their core assets and avoid the risk of a few users saturating their networks."
As the era of limits on data usage enters its second year here in the U.S., it's worth taking a look at how tiered plans are really affecting smartphone users. Can we make it through an entire month with only 2GB of smartphone snacking, or should we spring for that beefier 5GB plan? How much mobile data do we really need, anyway? And what can we do to avoid that dreaded "data overage" line on our next cell phone bill?
Here are some answers.
Smartphone data plans: What we're paying
Let's start with the state of the U.S. smartphone data market. The prices vary a bit, but when you round to the nearest whole number, you're basically paying about a penny per megabyte on the major carriers' current monthly data plans.
On AT&T, you can get 3GB for $30 or 5GB for $50; on Verizon, it's 2GB for $30, 5GB for $50 or 10GB for $80. T-Mobile bundles its data into voice packages and doesn't provide breakout costs, but if you subtract the amount of the stand-alone voice plans, the data price comes out to $20 for 2GB, $30 for 5GB and $60 for 10GB.
The lower-end options, meanwhile, are more expensive by the byte: AT&T offers 300MB for $20, which comes out to about 7 cents per megabyte, while T-Mobile offers 200MB for $10 -- or about 5 cents per megabyte. Verizon doesn't have a lower-end plan for smartphones.
The phased-out unlimited data plans, in comparison, were typically $30 a month. On Sprint, the one carrier that does still offer an unlimited plan, unlimited data usage costs $30 but also carries a $10 surcharge, so you're essentially paying $40 for the all-you-can-use option.
Beyond the basic numbersSo how much data are we actually using?
None of the major U.S. carriers was able to provide me with specifics about average usage on their networks or the percentage of customers subscribing to each data plan, but independent analyses can give us a pretty good picture of where things stand.
According to The Nielsen Company, the average per-user data consumption by U.S. smartphone customers was 606.1MB -- or about 0.59GB -- per month in the third quarter of 2011 (the most recent period for which measurements were available). That's an increase of 39% from the per-user monthly average in the first quarter of 2011 -- and a whopping 80% jump from the per-user monthly average in the third quarter of 2010, just one year earlier.
"For the average person who works and has a social life, 2GB to 3GB is plenty," says Roger Entner, a former Nielsen analyst and founder of telecom research group Recon Analytics. "It takes a very heavy user who is enthralled with their device to really blow through that bucket."
What this says is that, based on current trends, the majority of us can easily stay within the carriers' 2GB-to-3GB-a-month plans -- but most of us would have a tough time keeping within the lower-end, 200MB-to-300MB limits.
Data usage in the real world
All this talk of megabytes and gigabytes is one thing, but let's break down what it really means in real-world terms -- and what it would truly take to exceed that 2GB or 3GB limit.
First, I tracked my total data usage over a full day in which I engaged in relatively heavy Web browsing and social network activity, along with regular email usage and RSS-based feed reading. All of that combined -- and also factoring in any incidental data consumption throughout the day, such as app updates (there was one) and the few kilobytes used here and there by the operating system and random applications -- resulted in a grand total of 30MB of data transferred for the day. That kind of usage would add up to a month-long total of just 900MB -- not even a full gigabyte -- if it stayed consistent over the course of 30 days.
Of course, we use our smartphones for more than just basic browsing. So I also measured the amount of data used in an hour of high-quality music streaming via Pandora. That burned up about 32MB of mobile data -- meaning that, if you streamed a full hour of high-quality music and engaged in heavy Web and social network usage every single day, you'd still be under 2GB for the month.
The activity that consumed the most data in my tests, not surprisingly, was video streaming. Viewing 10 YouTube videos -- a random mix of clips averaging about 3.5 minutes in length, half of them HD and half standard quality -- sucked down a full 125MB of data. So, yeah, if you did that every day, you'd be looking at around 3.7GB of usage for the month.
Bear in mind, though: Most of us don't stream 10 full YouTube videos every single day, so that's an extreme, not something that would regularly apply to most people. (And even if you are watching a lot of videos, you're probably doing a lot of it over Wi-Fi, which doesn't count toward your monthly data limits.) In most typical usage scenarios, you browse the Web heavily on some days and lightly on others. You stream a few videos one day and none the next.
In short, as Nielsen's research reflects, a normal balanced pattern of usage means that your cumulative total can easily stay within the 2GB-to-3GB range -- with plenty of room to spare.
That doesn't necessarily mean you're saving money with a tiered plan compared to one of the old unlimited deals. In practical terms, for most users, things are probably about the same: You used to pay $30 a month for unlimited data; you now pay $30 a month for a 2GB-to-3GB allotment that you rarely (if ever) exceed. Unless you're using so little data that you can get away with one of the 200MB-to-300MB options, the only real difference from the unlimited past to the limited present is that you now have the potential to pay more, if you happen to have a particularly heavy month.
Heavy users and the future of 'unlimited'
But wait: Not everyone is "normal." While the average user may stay safely within the 2GB-to-3GB range, there are people who regularly use enough data to blow past those levels -- and they certainly pay the price.
Whether it's shelling out $50 to $80 for a higher-tier plan or paying $10 for every gig over your limit (or, in the case of T-Mobile, suffering dial-up-like speeds once you pass your monthly limit), the move toward limited data is definitely bad news for the nation's small number of heavy data users.
How small of a number are we talking about? According to an analysis conducted by Nielsen in the first quarter of 2011, only the 97th percentile -- the top 3% of all smartphone users -- exceeded 2GB of smartphone data usage per month. Within that subset of users, however, the level of consumption is huge: For example, the top 1% of users devour a hefty 4.5GB of mobile data every month, according to Nielsen's measurements.
"The carriers designed these plans so that 95% of customers fall into a reasonable tier, and the people that are really using data heavily end up having their behavior modified through their wallets," Entner says.
It isn't only the most extreme cases that result in hefty fees, though. Just ask Thomas Brewer, a medical billing specialist who uses his phone for Web browsing, music streaming and the occasional Netflix video. Brewer says he passes his 2GB limit with Verizon almost every month, usually by a matter of mere megabytes.
"The most I've had to pay so far is about $25 over my usual bill," Brewer says.
Robert Finley, a software engineer who likes listening to podcasts on his phone, recently upgraded to a high-tier plan in order to save himself a headache. Though Finley has never actually gotten a penalty from his carrier, he grew tired of nervously watching over his shoulder to make sure he didn't exceed his cap.
"It made me very guarded in my use of data and was directly counter to the cloud-based direction of the industry," Finley says. "It creates a climate of being a bit afraid of your device. Given the choice, there is no question I would always like an unlimited plan, even if it costs slightly more."
Some analysts think that type of mindset will eventually help usher unlimited options back into our lives. Entner, for one, believes a lot of Americans would opt to pay more for an unlimited plan, even if they didn't need one -- and that carriers will ultimately respond to that demand.
"For the consumer, an unlimited data plan gives them certainty," Entner says. U.S. consumers are "risk-averse, like predictability and don't mind overbuying," he adds. "Give it three to five years and we'll be back to unlimited data."Data-saving tips
- For now, unless you go with Sprint and its $40 unlimited offering, all you can do is make the best of the tiered data plans that are available. The good news is that you can take steps such as these to keep your mobile data usage in check:
- Use Wi-Fi whenever you can. At the office? At home? Toggle your phone's Wi-Fi mode on, and you'll avoid unnecessary 3G/4G network usage. Do the same in the ever-increasing number of public places with free Wi-Fi, such as retail stores and coffee shops. Just remember to be extra cautious about security when connecting to any unencrypted public network.
- If you use an Android device, there are several apps that can automate the process of accessing Wi-Fi networks; they'll switch your phone's Wi-Fi on when you enter certain locations and turn it off when you head out. I like Tasker, which is available for $6.49 in the Android Market. Setting Profiles, which costs $3.99, is another good (though less robust) option.
- Watch your background data consumption. A lot of apps, ranging from social media programs to news-reading utilities, check into cloud-based services to look for new updates during the day. Find the background data settings for relevant apps (depending on your phone's OS, the settings may be in the individual apps themselves or in the main system settings menu) and disable or dial back the settings on things you don't need. After all, if your phone polls Facebook for new messages every 15 minutes, that activity can add up over the course of a month.
- Set limits on your mobile data. Smartphones are getting smarter about helping you track and control how much data you use. Android has an integrated data management tool in its Ice Cream Sandwich (4.0) release that allows you to view and restrict each app's data usage, set warnings based on your overall data usage, and even set a cutoff point after which your phone will stop using mobile data altogether until your billing cycle resets.
- You can find third-party programs that will perform some of those functions for both Android and iOS. If you're using a pre-Ice Cream Sandwich phone, try My Data Manager Free; if you're using an iPhone, look for DataMan Free. Both apps provide basic monitoring and alerting services for your mobile data usage.