Data Plans Testing Limits

Mobile-phone customers who want to save money have figured out many ways to avoid charges for extra services. For instance, apps such as Google Voice can replace expensive text-message plans and allow unlimited messages. In response, phone companies are starting to abandon their old strategies of pushing extra services and are instead looking for new ways to sell the data access that so many apps depend on.

Verizon recently announced plans to effectively phase out unlimited data plans by requiring that customers with unlimited plans either pay full price for all new phones from now on, or give up those plans. This change makes the plans financially impractical for all but a very few exceptionally heavy data users—which, ironically, are exactly the customers it would seem Verizon would most want to get rid of.

Verizon and AT&T are instead pushing customers toward shared data plans with tiered pricing, which encourage customers to connect multiple devices to a single account, making it more likely they will use lots of data and need a more expensive pricing tier. At the same time, as people get tired of high phone bills, discount services are taking the opposite strategy by aggressively competing on price.

Services such as Cricket, Boost and Metro PCS have offered lower-cost service for some time, with the trade-off that they don’t subsidize phone prices and haven’t supported the fanciest devices, such as the iPhone. However, the latter is changing. The Straight Talk service from Walmart now offers unlimited data for $45 per month, requires no contract and supports iPhones. The one catch for iPhone users is that Straight Talk doesn’t support visual voicemail—but there are workarounds, including using Google Voice, so that won’t be a deal-breaker for most customers.

Verizon and AT&T are still marketing themselves as premium service providers. But as customers’ needs continue to narrow toward only one service—a good data connection—the practical difference between the premium and the budget mobile phone services is getting smaller and smaller.