True Unlimited Phone Data Plans Are Dead

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The meter is always running. Photo: Mihailo Milovanovic/Getty Images

Unlimited data plans, like MySpace, good Judd Apatow movies, and a booming housing market, were a defining feature of the mid-’00s. Before the iPhone, most telecoms saw no reason to restrict the amount of data you could download. How many emails could you really download to your BlackBerry or Treo?

And during the early days of the smartphone revolution, when a free iPhone was the carrot to get you to sign a two-year contract, unlimited data was almost always part of that deal. Indeed, many plans in the aughts still hinged not on how much data you could download, but on how many voice minutes you got or how many text messages you could send.

By the turn of the decade, as the number of voice calls plunged and data usage surged, telecom companies began to realize the mistake they had made. AT&T announced in mid-2010 they would be eliminating their unlimited-data plan for new customers, “grandfathering” in any customers that were already on such a plan. Verizon did the same in 2011, again allowing unlimited-data customers to continue on their plans, but not offering new customers the option of unlimited data.

The next five years was a period of tiered data plans, usually enforced by either hard throttling or large overage charges if you went over your data limit. Throttling was annoying; overage charges could be disastrous for someone who forget to switch over to their Wi-Fi network when they got home.

But during the past five years, people have only been using more and more data. When AT&T announced it was discontinuing its unlimited plan in 2010, the telecom company said the average user was downloading about 200 MB per month. By 2015, Swedish telecom giant Ericsson estimated the average North American smartphone owner used about 5.1 GB of data per month — and forecasts that by 2022, smartphone users will use 22 GB per month. North Americans’ total overall data usage was nearly doubling every year — here’s how much total data in petabytes North Americans were using on their smartphones, for every year since 2010.

In other words, at the same time that everyone suddenly was using a lot more data, data was becoming a more complicated thing to buy. Tiered data plans made life a pain, forcing customers to be cautious about streaming a video and audio in the wild, lest they blow through their data cap. And the idea of commoditized mobile data, paid for like a gallon of milk or metered out like electricity, grated on many users who first started using smartphones during the days of unlimited data.

T-Mobile already did mobile customers a great service several years ago, when it forced every other telecom to kill off the onerous two-year contract (even if it meant that those “free” upgrades and phones also went away). Now, it’s once again forcing change in the industry, killing off every single one of its cell-phone plans except for an “Unlimited” package for $60 a month. While not every carrier is following suit, they’re all making progress toward something slightly less antagonistic toward their customers.

Much like Sprint’s own unlimited package, T-Mobile’s unlimited plan isn’t truly unlimited. Both start throttling that data if you go over certain data limits — 28 GB per month in T-Mobile’s case, 23 GB per month in Sprint’s case. For those that live with smaller data caps, that may seem like a lot. For someone expecting to be able to use their phone’s data plan as much as they want, that’s streaming four or five HD Netflix movies.

Meanwhile, Sprint, Verizon, and AT&T are at least getting better about those overage charges. All are now offering plans that will start throttling users down to 2G speeds once you go past your data cap — instead of slapping on an overage charge because you went 500 KB over your limit for the month. It’s not perfect, and Verizon and AT&T’s data plans can still be confounding, especially when trying to figure out a multi-phone family package — but it’s better than it was even a year ago.

But what about those lucky few souls still grandfathered in on Verizon and AT&T’s old-school unlimited plans? They’re getting the squeeze. AT&T has slowly been raising the price of their unlimited data service — it used to be $30 per month just for data, and now is at $45 — usually bringing your total bill somewhere in the range of $90 per month. There’s also throttling involved — go beyond 22 GB a month and your unlimited plan will suddenly slow down. And if you try to use your unlimited data plan to tether your phone to your laptop to get work done on the road, AT&T will simply boot you from the service.

Meanwhile, Verizon users that were grandfathered into unlimited data only pay $45 per month — with an important caveat. The company announced on Wednesday that it will automatically switch any consumers that use more than 200 GBs of data per month over to a tiered plan. Now, it’s very fair to point out that you’d have to really burn through your data plan to break that 200 GB cap. Per Netflix, you’d need to stream about 285 hours of SD video or 67 hours of HD video in order hit that number. But let’s say you really do use all that data — 67 hours of HD video is easily doable if you’re watching one HD movie per night and maybe bingeing a show or two on weekends. And if you do blow past that 200 GB cap, the closest thing Verizon will offer after it kicks you from the unlimited service is its 100 GB per month plan — which starts at $450 per month.

Telecoms say there’s a valid reason why people shouldn’t get unlimited data. If you’ve ever tried to use your phone at an extremely crowded event or concert and found yourself unable to check your map directions or send an SMS, you’ve dealt with a congested data network. Even more so than local wired ISP networks (which can get congested during heavy usage times, like Sunday evenings), wireless data networks suffer from too many users — especially heavy users — all attempting to ping the same cell tower. But if you paid for an unlimited data connection in 2010, it still seems fair to say that a company should honor that agreement. My guess? Within the next year or two, Verizon and AT&T will simply cancel out all the grandfathered unlimited data plans, period, perhaps offering discounted plans in return, or “unlimited” plans that throttle.

So what if you truly want unlimited internet? You can do what I did. Donate $500 to the Calyx Institute and get a free Netgear mobile hotspot that piggybacks off Sprint’s LTE network and gets you unlimited data for as long as you’d like, with no monthly charges and no throttling. (It’ll cost you $300 to sign up for another year of service after year one.) Amortized out over 12 months, that’s just under $42 a month for unlimited data at $500 a year, or $25 a month at $300 a year. Combine that with a cheap MVNO plan like Project Fi or Republic Wireless for voice and text, and it’s still possible to get unlimited data at reasonable rates — but you’re going to have to go outside the major carriers to do it.

True Unlimited Phone Data Plans Are Dead