AT&T Kills Unlimited Data Plans: Good for Smartphone Users, Bad News for the iPad

AT&T announced today that they are ending their unlimited 3G data phones.  As Dan Indiviglio wrote for our site, this is not a bad thing for most smartphone users, who don't chew through anything like the new 2 GB cap on their premium data plan.  But it may be a problem for iPad users, several million of whom just bought the things on the assumption that they'd be able to do a whole lot of data-intensive browsing.  iPad users don't have contracts; they're allowed to purchase by the month.  They're feeling a bit burned, given that the company seems to have waited until the first great wave of iPad buying ended.

I have a Verizon mi-fi wireless device, and I just took a look at my data usage since the 27th of May, when my plan rolled over.  In four days, during which I spent one day lolling on the beach and playing video games without checking email, I used 500 MB.  That's without downloading any videos or music. So 2GB seems like a pretty low limit.

AT&T is offering a slight balm to wounded iPad owners: they can grandfather in if they set up their device by June 7th.  But this seems to mean that those owners will no longer be able to drop their coverage on months when they're not using it; they'll need to be in the unlimited data tier continuously.

This is probably going to generate a substantial backlash against the company.  Some of it would have happened anyway, of course; people seem to think that there is some sort of civil right to unlimited data.  But the timing is particularly awful, and it's hard to believe that it wasn't deliberate.

Timing aside, I think AT&T made the right decision.  The iPhone is bogging down their networks in a handful of cities to the point of serious dysfunction, and people with iPhones do not generate enough revenue to justify the cost of the equipment buildout that would be needed to support better service.  Locking down data usage will at least ease the burden, and more importantly, prevent the iPad from making their phone service entirely unusable.

On the other hand, it just made the iPad a much less attractive value proposition.  I assume that Apple knew about this, but they can't be happy.  Presumably, they had a hand in influencing the timing in order to maximize their sales push before the new rules go into effect.