AT&T is redefining the term "unlimited data" for its legacy customers. Under the new policy introduced Thursday, some unlimited data subscribers will see their speeds throttled back whenever they exceed a fixed monthly cap.
According to the wireless carrier, the reason why the new reduced speeds only apply to certain unlimited smartphone customers is because their data usage is significantly higher than those on tiered plans. "For example, in January, the top 5 percent of our unlimited data plan customers used an average of over 50 percent more data than the top 5 percent of customers on tiered plans," AT&T said in a statement.
Customers with 3G smartphones operating under an "unlimited" plan will receive a text message when their data usage approaches 3 GB in a single billing cycle. Thereafter, the subscriber's data speeds will be reduced for the remainder of that billing cycle.
"If you have a 4G LTE smartphone and still have an unlimited data plan, the same process applies at 5 GB of data usage, instead of 3 GB," AT&T said.
The company already had been throttling back speeds on its "unlimited" customers who exceeded the top 5 percent of data usage in their respective markets. Some had complained that the cap was unclear because it varied from market to market and month to month, and the new fixed caps appear to be an attempt to clarify expectations.
So Many Restrictions
Data usage notifications like the ones AT&T describe are useful, said Lisa Pierce, the managing vice president for unified communications, network systems and services at Gartner . "But frankly," she said in an e-mail Thursday, "there are so many restrictions in place from most providers that we'll soon have to ask what 'limited' means!"
AT&T attributed the change to an impending wireless spectrum crunch.
Under its merger contract with T-Mobile, AT&T had to cede a swath of spectrum to its rival when the deal failed to receive regulatory approval. Recent industry initiatives such as LightSquared, which promised to provide the nation's carriers with additional spectrum via satellite, have also been nixed by the Federal Communications Commission.
"Experts agree that our country is facing a serious wireless spectrum crunch," AT&T told customers. "While access to more spectrum is absolutely critical, we are continuing to invest aggressively to meet customer demand."
AT&T also noted that wireless data traffic on the carrier's nationwide network has grown by 20,000 percent over the past five years. Moreover, the nation's No. 2 wireless service provider had 39.4 million smartphone users at the end of last year, compared with just 6 million in 2006.
Maintaining Parity with Surging Demand
AT&T claims the data speeds realized by 95 percent of the wireless carrier's smartphone customers will not be affected by the new policy. Moreover, the carrier stressed that subscribers with "unlimited" plans will still be able to use as much data as they want.
"That won't change," AT&T noted. "Only your data throughput speed will change if you use 3 GB or more in one billing cycle on a 3G or 4G smartphone or 5 GB or more on a 4G LTE smartphone."
AT&T plans to invest about $20 billion during 2012 with a focus on wireless. However, the carrier's latest policy plan change -- which is sure to irritate many of its longtime subscribers -- is a good indication that AT&T does not believe that the improvements coming to its nationwide network will be enough to maintain parity with surging demand for wireless data.
Sprint is the only national wireless carrier to offer truly unlimited data plans for smartphones, and expects to continue to offer them to customers.
"Sprint has no current plans to offer tiered data pricing for smartphones," a Sprint spokesperson said Thursday. "We continue to add capacity to the existing network and further additional capacity will be added as part of the Network Vision deployment plan."