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Author: Subject: Are you overpaying for smartphone data?
Careyn
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[*] posted on 8.3.2011 at 01:55 PM
Are you overpaying for smartphone data?


http://img830.imageshack.us/img830/9364/datausagechart1.png

This chart includes data about smartphone subscribers' data consumption based on more than 47,000 phone bills from June 2010 to July 2011.

Most smartphone subscribers in the U.S. use far less data than they are allotted by their wireless provider, but data hogs, who are likely to bust through those caps, and frugal data nibblers know where to find the best deals.

It's only been a year since AT&T eliminated its all-you-can-eat mobile data plan and adopted a tiered offering instead. Earlier this summer, Verizon Wireless also ditched its unlimited data plan for a "usage-based" plan. And just last week, AT&T said it would "throttle," or slow, connections on subscribers with unlimited plans if they exceed the 2GB threshold.

The elimination of all-you-can-eat options and the addition of "throttling" on some unlimited data plans has confused and angered many smartphone users. These customers worry that their occasional Netflix-viewing or Pandora-music streaming will lead to massive overage charges or a hobbled data service.

But the reality is that most consumers don't need unlimited data. And even the current 2GB caps offered separately by AT&T and Verizon are still far more than most people need.

Usage information collected from more than 47,000 smartphone customer bills between June 2010 and July 2011 and compiled by Validas, a company that analyzes cell phone bills for consumers, supports this notion.

Not only do the Validas findings show that most smartphone subscribers are using only a fraction of their mobile data service each month, but it also shows that Sprint Nextel, the only major operator still offering an unlimited data plan, is attracting data gluttons, while T-Mobile is catering to more frugal data dieters with the cheapest data plan on the market: $10 for 200MB of data per month.

"In general, almost all smartphone users across all four major carriers are not even close to exceeding the 2GB usage caps," said Dylan Breslin-Barnhart, head of marketing for Validas.

"But we can project from the information we've analyzed that people who are planning to be heavy data users will naturally migrate to Sprint, which has unlimited data."

Overpaying and underusing

When Verizon Wireless introduced its new smartphone data pricing in July, it called the plan "usage-based" billing. But the way these plans are structured, Verizon subscribers on average are only using 20 percent of the data that they are paying for. According to Validas, the average smartphone customer consumed about 394.2MB of data per month. Verizon's lowest cost plan is $30 a month and offers 2GB of data per month.

Some AT&T subscribers are also paying for data they don't need, even though the carrier offers a cheaper alternative for customers who don't want or need 2GB of data. For $15 a month, subscribers can get 200MB of data. The 2GB plan costs $25 a month. Still, the average AT&T smartphone customer uses about 425MB of data per month, which is about 21 percent of the 2GB offering. But that is more than double the 200MB lower tier, which means many customers likely still end up in plans that offer more than what they need.

While customers are clearly over-subscribing to data service, Charlie Golvin, an analyst with Forrester Research, says that most customers are fine with this. He said that people are willing to pay more for data that they don't use so that they don't have to worry about overage penalties.

"Most people are OK with paying a little more for data they aren't using provided they don't get any nasty surprises," he said. "Customers who are price sensitive will walk with their feet and go to T-Mobile, which only charges $10 a month for data."

Data hogs and nibblers

Indeed, this is exactly what Validas's data indicates. Sprint and T-Mobile appear to be catering more to the extremes in the market. Customers who are likely pushing up against the 2GB data caps are likely to subscribe to Sprint's unlimited plan. And consumers on a budget will gravitate toward T-Mobile.

According to Validas, the average smartphone subscriber on Sprint Nextel uses about 778.8MB worth of data a month, which is nearly double the usage of an average AT&T smartphone user that consumes about 425MB of data and a Verizon Wireless smartphone subscriber who uses 394.2 MB. While an average Sprint customer would still only use about 39 percent of a service capped at 2GB, it's clear that the unlimited data plan and the speedy 4G network is attracting more data hungry users.

Meanwhile, the average monthly usage on T-Mobile's network was slightly lower than AT&T's and Verizon's network, but the median usage was about a third of AT&T's usage and about half of Verizon's median usage. On average T-Mobile subscribers used about 303.9 MB of data per month, but the median in terms of usage was only 51.4 MB. This means that while there are likely some heavy data users on T-Mobile's network, there is a large percentage of smartphone customers using very little data.

But the challenges for these smaller players are mounting. And there's a good chance that heavy data users and those looking for the cheapest deal in data, will soon have fewer options.

As CNET has previously reported, Sprint may soon be forced to eliminate its unlimited data plan because it won't be able to keep up with growth from attracting the heaviest data users. And T-Mobile, which has long catered to value-oriented customers, has become an acquisition target because it hasn't been able to grow subscribers or profits, even with its cut throat pricing. AT&T announced its plans to acquire T-Mobile for $39 billion in March. The deal is expected to close early next year.

Price-sensitive smartphone customers will still have AT&T's $15 a month plan if the AT&T/T-Mobile deal is completed. Mark Siegel, a spokesman for AT&T, said he couldn't comment on whether the company would continue to offer the $10 plan after the merger, but he said the company is committed to offering a less expensive tier to appeal to price conscious subscribers.

"We introduced the tiered pricing over a year ago because customers told us they wanted something other than a one-size-fits-all plan," Siegel said. "And it's been a great success, offering people who wouldn't ordinarily have been interested in a smartphone, the chance to buy one."

As for the small percentage of super-data users, Recon Analytics' Entner said that even if Sprint is forced to dump its unlimited data plan, the average smartphone subscriber won't have to worry about exceeding the 2GB caps for at least another year or two. But he acknowledged the data hots will suffer.

"They'll have to pay," he said. "And the free ride will be over."

Read more: http://news.cnet.com/8301-30686_3-20087222-266/are-you-overpaying-for-smartph...
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spitlogic
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[*] posted on 8.3.2011 at 03:16 PM


Haha. Wow. I don't have a smart phone because I suspected it was a rip off. With all the free wifi spots around the country there really is no need for you to update your Facebook at every impulse.

I'm shocked, but not surprised.




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[*] posted on 8.3.2011 at 05:43 PM


You can get over limits by using a proxy.



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Careyn
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[*] posted on 8.4.2011 at 08:01 AM


Quote:
Originally posted by spitlogic
Haha. Wow. I don't have a smart phone because I suspected it was a rip off. With all the free wifi spots around the country there really is no need for you to update your Facebook at every impulse.

I'm shocked, but not surprised.


I have no interested in a smart phone either - too expensive and I don't feel like I'd use many of the features. My girlfriend was trying to figure out how to reduce her monthly bills - her and her two children (one high school/one college) all have smart phones - and she said between that bill and cable she's dropping in excess of $500/month. Her kids don't want her do downgrade either service so she's facing a dilemma. She didn't complain until she had to recently purchase a new car and said that those two bills are about as high as her car payment.

I wish I would drop those kinds of dollars for a phone or cable. She's got far more bank than I but it's still causing her to pause.
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spitlogic
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[*] posted on 8.4.2011 at 09:40 AM


I never thought of it like that. Essentially you could pay off a car with the amount of money a home with more than one person with a smartphone. My oldest wants one too. I told her if she got one she would have to pay the extra charges (data plan and all). End of discussion...lol.



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[*] posted on 8.4.2011 at 10:52 AM


Cricket is my service provider. I only pay 63.00 (total) for unlimited service for my smart phone. I had verizon at first and they realllllly ripped me off!



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