AT&T's data caps affect almost everybody

Mobile phone users, rival carriers and Internet content providers may all feel the impact of AT&T's new data pricing plan

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In fact, some independent data supports AT&T's contention that most users will pay no more, or even less, than they do today. Consumer Reports said Thursday that the average iPhone user should pay the same or less for service under the new data plans. AT&T sells the iPhone exclusively in the U.S.

The average iPhone user consumes 273MB of data per month, according to a Consumer Reports blog from February that relied on independent wireless bill analysis.

That is much more usage than other smartphone owners, but Consumer Reports also found that more than half of iPhone customers use less than 200MB per month, supporting AT&T's claim. With that amount of data, the CR analysis found that the new $15 AT&T plan with 200MB per month would cut data costs in half for the majority of iPhone owners.

Even though Consumer Reports reported that finding, it warned consumers that AT&T could easily raise the introductory rates or adjust the data limits downward. It also noted that the new iPhone OS 4.0 mobile operating system coming this summer will provide multitasking that would allow wireless consumption of data from multiple apps at one time, further pushing the ceiling on any data limit.

Won't users worry about overage charges and severely limit their mobile Web browsing and video usage?

The answers are: perhaps and perhaps. How users react to the data caps could depend on how mobile content providers prepare for caps, such as offering higher-quality content that's more customized to individual users, possibly with the help of GPS location information.

The implications of data caps are significant for many groups, including the carriers and their customers, but also Web content providers, include advertisers.

Today, with no data caps, content providers (which means anybody with a Web site or any site that includes an ad or other third-party content) "can just throw stuff out there," Burden explained.

But what AT&T has set in motion, and that Verizon and others will likely follow, is a system where mobile consumers "will make choices over what they view, and it won't just be everything," he added. "When it comes to downloading data and advertisements, consumers will say, 'I might not need that,' or, literally, 'I'm paying for that.' "

As a consequence, content will need to be higher quality or have value for users to call it up. Users might view advertising as an annoyance and an expense, which could shake up the traditional advertising model. Advertisers might need to pay more to content providers to support higher-quality content or to ship an ad to an individual user based on a retail store he might be standing near using location information, such as Google Maps or other systems. That new dynamic could also prove valuable to the carriers, which could cash in, Burden theorized.

"Data caps might be a way for operators to angle to take a portion of the ad dollars by positioning themselves as the important delivery mechanism," Burden said.

"So the operators might make a play for ad dollars, since they can say, 'All our subscribers are going to be watching the meter.' In a sense, it's a lever the wireless carriers have on the advertisers. I believe it's an ulterior motive down the road."

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

Copyright © 2010 IDG Communications, Inc.

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