Today, AT&T announced the end of unlimited data plans.  They currently charge $29.99 for this on the iPad and iPhone.  On June 7th, the new plans will be:

Rate Plan Amount of data/month Cost/month Overage
DataPlus 200MB $15 $15/200MB
DataPro 2GB $25 $10/GB

Their tethering option is similarly unattractive.  It costs $20 on top of the DataPro plan, and worst of all, it uses the same pool of data.  Thus your 2GB allotment applies to both your smartphone usage AND tethering! 

The current situation with Verizon Wireless is better.  They continue to offer unlimited data for $29.99 (Update: “Unlimited” is actually limited to 5GB) , but have signaled that they will be moving away from this in the future.  Their new pricing has not been shared, but you can bet that it will be similar to AT&T.

Opinion

I believe that this is a very troubling trend.  The newest smartphone OSes like iPhone, Android and WebOS are designed for constant Internet connectivity and bandwidth will become even more important with new mobile technologies like video conferencing, video streaming and cloud-based applications.  Unfortunately by increasing the bandwidth costs, carriers are limiting adoption of these services and stifling innovation. 

Raising bandwidth prices is a short-sighted strategy.  Data usage will only increase and as it does customers will become more frustrated with rapidly growing bills.  Ironically, increased usage presents an opportunity for a carrier to provide a better end user experience with fast wireless data and fair prices.  The provider who gets this right has the potential to increase its market share and generate additional profits and revenues.  Unfortunately, it appears that these two major players are adopting Jerry Maguire’s mantra of “Show me the money”; however this story is unlikely to have the same happy ending.