AT&T dumps iPhone unlimited data plan, adds tethering

New capped data plans go into effect June 7; advocacy group sees 'price gouging'

AT&T today announced that it is dropping its unlimited data plan for new iPhones as of June 7, and said it would also offer tethering to iPhone customers for an extra $20 per month.

Rather than offer new iPhone customers its current unlimited data plan, which costs $30 per month, AT&T will provide a pair of plans that cap the amount of data users can consume before paying additional fees.

AT&T characterized the move, which applies to other smartphones as well, as a win for consumers. "We're breaking free from the traditional 'one-size-fits-all' pricing model and making the mobile Internet more affordable to a greater number of people," said Ralph de la Vega, AT&T Mobility CEO, in a statement today.

But the advocacy group Free Press said AT&T's new plans are anti-consumer. "While AT&T asserts that its high-end 2GB cap will only impact the heaviest users, the fact is that today's heavy user is tomorrow's average user," warned M. Chris Riley, the organization's policy counsel, in a statement. "It is price gouging for AT&T to charge the low-end users $15 per 200MB, and to charge $20 for tethering capability even if no additional capacity is used."

AT&T will kick off the new capped plans next Monday, the opening day of Apple's Worldwide Developers Conference, where Apple CEO Steve Jobs is expected to unveil the next iPhone as he touts the iPhone OS 4 operating system.

The new $15-per-month DataPlus plan limits monthly data consumption to 200MB, with each additional 200MB running $15. Data Plan Pro, on the other hand, costs $25 per month and caps data at 2GB, with each 1GB beyond that priced at $10.

AT&T's unlimited data plan for the iPhone has been a hallmark of the U.S. carrier's partnership with Apple, but AT&T has regularly complained that iPhone customers consume the bulk of its data capacity, and have hinted that caps might be coming.

"This was inevitable," said Jack Gold, an analyst at J. Gold Associates. "Unlimited was unsustainable. This isn't like your cable modem."

Philip Redman, an analyst with Gartner, echoed Gold. "This was expected. Carriers have to come to a reckoning of cost and usage, and unlimited data plans were experimental," said Redman. "I see it as a win-win."

In Redman's eyes, AT&T's new $15 and $25 plans means a price cut of at least $5 for 98% of iPhone owners, the number Gartner estimates consume 2GB or less of data each month. "I've been a pretty negative voice on what AT&T has done in the past, but I really think this is a win-win for both AT&T and consumers."

Gold wasn't so sure. "How do they really know that?" he asked, referring to Gartner's estimate. "Only AT&T knows what their subscribers consume. So the big question is how many people is this going to effect? How many will go beyond the cap?"

If AT&T manages to squelch the heaviest users' consumption, and thus improve the overall performance of its network -- a sore spot with iPhone owners almost since the day Apple introduced the device three years ago -- almost everyone will be happy, said Gold. "One hopes [AT&T] was smart about the pricing of those plans," he added.

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