May 19, 2024

As Networks Speed Up, Data Hits a Wall

But there’s a catch, of course.

Cellphone plans that let people gobble up data as if they were at an all-you-can eat buffet are disappearing, just as a new crop of data-gobbling Internet services from Netflix, Spotify, Amazon, Apple and the like are hitting the market or catching on with wide audiences.

These services use far more data than simply checking e-mail or browsing the Web, so their heaviest users may find themselves running over their plan’s monthly allotment and paying extra.

The wireless carriers say their tighter limits will affect only a small percentage of customers. And they say they are simply trying to get ahead of an exploding appetite for data and avoid problems with overburdened networks.

Mark Siegel, a spokesman for ATT, said that if current trends continued, the company’s network would carry more data in the first two months of 2015 than in all of 2010. He described the pricing issue as a “balancing act,” adding: “The tiered data plans will meet the needs of the overwhelming majority of consumers. A lot of people think they’re heavy users, but they’re not.”

But analysts say that inevitably more people will find themselves in the “heavy user” category, particularly as more of them trade in their lower-end phones for smartphones and move to 4G networks.

For most people who use their phones to check e-mail, surf the Web and watch an occasional video, the move toward tiered pricing will not immediately raise their phone bills. Verizon’s monthly plan offering two gigabytes of data for $30, announced last month, costs the same as its old unlimited plan, for example. But even now it doesn’t take much for a media-hungry smartphone user to chew through two gigabytes; watching Netflix video for more than roughly 20 minutes a day will do the trick. And an extra gigabyte will cost Verizon customers an additional $10.

“Over time, as you give people faster devices with faster speeds, it’s going to be a lot easier to hit that two-gig mark,” said Philip Cusick, an analyst with JPMorgan Chase who follows the telecommunications industry.

In addition to worrying about overtaxing their networks, wireless carriers are looking for new ways to make money from mobile data and applications, rather than voice minutes.

Over the last three years, the amount of money consumers spent a month on mobile calling declined to $30 from $40, according to Recon Analytics. During the same period, the average amount spent on data nearly doubled, jumping to $13 from $7.

“We’ve fallen in love with data and the utility that we get from it,” said Roger Entner, an analyst at Recon. “The usage pattern has changed dramatically.”

ATT and Verizon have both phased out their unlimited data plans in favor of tiered plans. Verizon offers 75-megabyte plans for basic phones, as well as two-, five- and 10-gigabyte plans for smartphones, topping out at $80 a month. Those in the more expensive plans who go over their limit are charged $10 for another gigabyte, as are ATT customers who exceed the limit on that company’s two-gigabyte plan, which costs $25.

T-Mobile, which ATT is hoping to acquire, offers tiers from 200 megabytes up to 10 gigabytes. Those on the 200-megabyte plan are charged 10 cents for an extra megabyte. And if those with the upper-tier plans exceed their limits, the company slows their data connections until the next billing period.

Sprint is the last carrier to hold onto its unlimited data plan, but analysts and industry experts say it is unlikely to last.

All of the carriers let customers track their data use through their Web sites and on their phones, and they send alerts when customers are in danger of going over.

Of course, those who want to avoid paying more can simply wait until they are connected to a Wi-Fi network to, say, download high-definition videos, since this will not count against the monthly limit. But that doesn’t help someone who wants to stream movies or music on a long evening commute.

Terry Hartup, 34, who works as a technology consultant in Clearwater, Fla., said he was frustrated that his connection might be slowed if T-Mobile decided he was using too much data.

“These new services are coming out that let us do more, but the pipe is getting smaller and smaller,” he said. “And costing us more.”

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