AT&T's data plan pricing: Bringing confusion back to the game

Summary:AT&T's data-plan price change may look like a moneysaver for some folks but it brings some confusion back to the mobile phone business and could stifle innovation.

It's already happening.

I heard from a friend last night who was concerned, following the news of AT&T eliminating its unlimited data plan, about the number of "gigabits" he was using by streaming Pandora on his Blackberry. Was his bill going to go up? How is he supposed to measure the "megabits." And, more importantly, does Pandora or YouTube use a lot of them?

With this move to a two-tiered, no-unlimited-usage pricing plan, AT&T - and any other carriers who follow suit - are throwing confusion back into the mobile business. You see, with an unlimited plan, there comes some peace of mind that a data connection can be used as much as the customer chooses and there will be no surprise charges at the end of the month. For consumers, it's a step backward, even if it's sugar-coated to look like a cost savings.

With caps in place, customers will have to monitor their usage, just as they've done in the past with voice minutes. There's one big difference, though - average consumers grow up with an understanding of time and therefore have a sense of how to track voice minutes. Same goes with things like gasoline. We know about how many miles/kilometers we can travel on a single gallon/liter of fuel - and our cars come with built-in gauges so we can keep track of what's left in the tank.

Data usage is a bit trickier.

I gave my friend a quick lesson on the difference between kilobytes and kilobits and why the difference between them is important but I think my words went in one ear and out the other. My friend wanted to know, for example, how many "megabytes" (hey! he was listening) he's using by streaming Pandora for about 90 minutes a day - roughly his daily round-trip commute and if he was in danger of exceeding the new limits.

I couldn't answer him - because I didn't know.

The Pandora site didn't provide that sort of information - or at least not in a place where it was easy to find. And the carrier sites made me click and guess and click some more until I found some sample usage data charts - and even those weren't all that helpful.

For what it's worth, AT&T's data calculator was the best - unfortunately, it's not advertised or marketed on the site's home page, something that will hopefully change soon, so I had to dig to find it. With some quick math, I was able to calculate that 90 minutes of streaming music daily - by itself - comes to about 2.6 gigabytes of usage per month. And that doesn't count anything else he might do, such as upload photos to Facebook, watch a YouTube clip or even send an email attachment.

Under AT&T's new data plan, his Pandora usage would take him about 600 megabytes over the 2-gigabytes-for-$25 Data Pro plan. For another $10, he'll get 1 more gigabyte of data - bringing his total to $35 per month, or $5 more than he pays now. Who knows what will happen if he streams for a weekend road trip?

Maybe the $5 won't break his bank and I suppose he should be on the hook for a few more bucks seeing how he's one of those heavy data users that the light users complain about. (Luckily for him, existing customers are grandfathered in to keep their unlimited plans.) I can see how some might argue that these new plans are better for customers.

But are they? If he's spooked by overage charges, he's likely to slow down his Pandora usage and less likely to try other data-hog services that may hit the mobile marketplaces. After all, it's one thing to pay a one-time $2.99 for an app but quite another to cough up $10 extra every month because those services max out your data usage. Inevitably, it could slow down the fast-growing mobile app marketplace. Is that a good thing?

Maybe it's just me, but it seems that AT&T is choosing to lower their offerings under the guise of saving customer's money when it's really just trying to discourage usage so its network won't be strained.

By the way, if you're holding out for a new iPhone, you'll be bound to these new data plans. The new plans go into effect on June 7. That's this Monday, the same day that Steve Jobs will take the stage at Apple's Worldwide Developer's Conference to introduce - according to the rumor mill - the next generation iPhone.

I'm so glad I bought a Droid Incredible and signed for two more years with Verizon.

Also see: AT&T's ETF hike: Lock in those iPhone customers for as long as possible

Topics: AT&T

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