Sprint Nextel will add a $10 per month Premium Data add-on charge to all newly activated smartphones beginning on Jan. 30, the nation's third-largest carrier said today.
The charge, coming from the lowest-cost U.S. carrier for unlimited plans, was inevitable given the high amount of data smartphones use, analysts said. Other carriers will be raising rates or setting data limits for the current prices if they have not done so recently, they predicted.
"Data is a commodity and commodity prices will increase with increased demand," said Jack Gold of J. Gold Associates. "As long as subscribers keep signing up and using the services and carriers perceive somewhat limited competitive pressures such as lower customer churn, carriers will continue to raise prices...or lower data limits for the same cost. Everybody is, or will be, doing this."
Gold added: "It's a lot like the airlines. Filling the seats means you can raise fares."
Currently, the $10 per month charge applies only to the HTC Evo 4G, HTC Evo Shift 4G and Samsung Epic 4G smartphones, but it will be expanded to all smartphones Sprint activates and supports beginning Jan. 30. Phones that run a variety of OSes, including BlackBerry, Android, Windows Mobile and Palm, are affected, the carrier said. Current customers don't pay the higher charge unless they upgrade to one of the smartphones or activate another smartphone.
All smartphones at Sprint use unlimited data plans.
Even with the add-on charge, Sprint said it remains the best value in wireless when compared to the unlimited data plans of other carriers. The Sprint Everything Data plan, with free calls to any mobile phone and unlimited data is currently $79.99 a month; that compares to $99.99 a month at T-Mobile USA and $119.98 at Verizon Wireless, according to the Websites of those carriers. AT&T no longer offers an unlimited data plan, although some long-term customers may have been grandfathered in to such a plan with the carrier.
Verizon is still mulling what to charge for data usage on the coming Verizon iPhone, a spokesman said Tuesday, though it has set up five tiers of data capacity for the Galaxy Tab it sells, with a monthly overage fee for each cap. Some have suggested the highest data plans for the Verizon iPhone could range from $80 to $120 a month.
Sprint defended the $10 charge as a way of keeping its pricing simplified while maintaing a wireless network "able to meet the growing appetite for a richer mobile experience."
"While some of our competitors impose overage charges and complex plans, Sprint continues to provide a worry-free unlimited data experience while on the Sprint network," said Bob Johnson, president of Sprint's consumer business. "This is responsible, sustainable and reflects our commitment to simplicity and value."
Sprint said smartphone customers use, on average, 10 times more data than users of traditional mobile phones with some data features. Johnson noted an "exponential" increase in the use of mobile data applications. Sprint referred to Cisco information that shows mobile data traffic is expected to double globally each year through 2014.
Some analysts said the new charge indicates renewed confidence at Sprint, which has wrestled with subscriber growth in recent years, but began to see improvements in late 2010. Sprint has slated a major announcement on Feb. 7, and plans to offer a BlackBerry PlayBook tablet running on WiMax this summer.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed . His e-mail address is email@example.com .
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This story, "Sprint Adds $10 Monthly Data Charge to New Smartphone Users" was originally published by Computerworld.