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Opinion: Do We Need Unlimited Data for the iPhone 5?

By - Source: Tom's Guide US | B 36 comments

Or, for that matter, do you really need unlimited data on any smartphone?

The Internet rumor mill suggests that Sprint will be getting the iPhone 5 on the 7th of October.

The carrier expansion is an inevitable evolutionary step, but the far more interesting speculation is that Sprint will be extending its unlimited voice-data plan to the iPhone 5 as well. This will create a unique value proposition, or perception, depending upon your view. How badly do we want an all-you-can-eat voice and data plan?

There is a time when rumors turn the corner to become seriously credible, which is the case here. According to those rumors, Sprint will be getting the iPhone 5 more than four years after the launch of the original iPhone with AT&T and more than three years of exclusivity for AT&T. In order to attract attention, Sprint is apparently planning to offer its $99.99  "simply everything" all-you-can-eat data plan for the iPhone 5. This is occurring at a time when we are accustomed to tiered data plans that are sold with borderline deceptive marketing pitches. For example, a 200 MB plan that is priced at half the price of a previous flat fee plan is touted as being in the best interest of the iPhone user and will cost less in the end. (Let's be honest. The purpose of the tiered plan is that we frequently exceed it and pay more, all the while feeling guilty about being a burden on a carrier's network capacity.)

Just like AT&T and Verizon before[l1]  it ended their plans, Sprint is expected to be using an unlimited plan as a teaser that may be phased out as soon as the initial enthusiasm wears off and everyday business sets in. I am wondering how much do we care about unlimited plans, and does Sprint have a chance to compete with AT&T and Verizon simply by offering an unlimited data and voice plan.

Perception: All-you-can eat deals are a good deal

There is a fantastic Japanese sushi place in our area that offers a $21.95 all-you-can-eat buffet that includes three dozen different types of sushi as well as oysters, crab, octopus, frog legs and at least a dozen dishes I am pretty sure I will never touch. I go there because of the sushi and can't help having a strange feeling of having overspent every single time I leave the place. Unlimited deals are always associated with the perception of a good deal and your personal conviction that such deals will save you money. I tend to believe that the sushi buffet place saves me money, but I am not convinced since I am not eating the potentially "expensive" food that would give me the unquestioned perception of a good deal. I return at least once a month anyway, as I like the food and know what I will be spending every time I go there. I don't particularly enjoy financial surprises.

I don't think that a wireless unlimited plan is very different from the unlimited food scenario. An unlimited data plan does not guarantee to save you money and, depending on your needs, there may be limited deals that are cheaper, but you know the amount that you will spend every month. There is a certain freedom of choice that comes with a flat fee deal. You don't care how much data you consume, and that peace of mind may be worth a few extra bucks every month. I am using a crippled T-Mobile 5 GB data plan right now and just checked for the sake of this article what my data usage is – about 800 MB per month. I probably could get a better deal somewhere else, but I believe that there is value in having the choice to use as much data as you want without having to fear that your carrier will surprise you just because you got stuck watching YouTube videos and you forgot that you weren't on Wi-Fi.

The Unique Case of the iPhone 5

Unlimited data plans and the iPhone have a very special relationship. I remember complaining about the original iPhone and AT&T's moody network connection back in 2007. In my review, I concluded that the iPhone and its capabilities were at least two years ahead of AT&T's network. The description of "unlimited" originally was a very euphemistic word as the connection was the limiting factor. Even if you were downloading data continuously, you still would have been in the single-digit GB range per month. If you ended up at public events that had people tweeting and perhaps even blogging from their phones, the connection was frequently unavailable and you did not use data anyway.

An interesting fact about the iPhone is that in 2005, Intel envisioned it to be the reference model of a "mobile Internet device." It was a device that we could carry with us at all times and stay connected to the Internet.

There is no other product that exemplifies mobile Internet usage as much as the iPhone.  The iPhone's software platform lives and breathes by being connected to data. Yet the phone's innovative power seems to be constrained by tiered data plans. For example, Facetime should be working over cellular networks but does not. Verizon recently advertised a 4G Android phone as being great for streaming Netflix movies via its cellular connection. Try that via a tiered plan and you may be spending your retirement fund at 200-500 MB per movie.

Common sense would dictate that a mobile Internet device needs an unlimited data plan to function according to its purpose. There may be a portion of unreasonable excessive use by some users, but since when is a data volume of 10 GB per month for $80 (at Verizon) a reasonable offer? There has to be some middle ground. The iPhone (and Android phones as well) is clearly moving toward much more data-intensive services, and I don't believe that the current price level of tiered data plans can be sustained in a market with healthy competition.

The Sprint deal: $100

One would think that Sprint should have a significant competitive advantage with an unlimited voice data plan for $100 per month, as far as perception is concerned. For example, with AT&T it costs $105 for 450 voice minutes along with 4 GB of data and text messaging. Verizon charges $110 for 450 voice minutes, 5 GB of data and 5,000 text messages per month. T-Mobile’s rate is $110 for 500 voice minutes, 10 GB of data and text messaging. However, if you consume fewer than 450 voice minutes and less than 2 GB of data per month, you only spend $85 with AT&T, $90 with Verizon, and $70 with T-Mobile. Sprint, along with the iPhone 5, may also be offering its unlimited data/limited voice plans, which include, for example 450 minutes of calling and unlimited data for $70 per month.

The bottom line is that you should know how much voice/data you actually use, especially if you are on a budget. Nielsen says that iPhone users consume, on average, 492 MB of data while Android users consume 582 MB of data. If you aren't downloading videos, this data volume is very realistic for an average user, but remember that innovation in this space will cause the average data usage to go up over time. If you are using 500 MB today, you may actually be using 1 GB a year from now. Be aware of that and choose your data plan wisely.

Can Sprint afford an Unlimited Plan?

Of course, unlimited data would be the best solution. Use whatever data you want without worrying about it. Whether this plan can be successful for Sprint will largely depend on the iPhone 5 itself. What new types of data services will be available? Will Sprint allow Facetime over cellular?

This may also cause Sprint to attract heavy data users who place a significant load on its network, so it may have to think about tiered plans in the future as well. Offering only the unlimited plan may actually put Sprint at a marketing disadvantage, and there could be the perception that the Sprint iPhone 5 is the most expensive option out there. Sprint may want to think about tiered data plans right away and attack its rivals head on. Underbidding AT&T by $5 per plan and keeping an unlimited plan may be the best value option available for consumers. That should get things moving.

I strongly believe that current data limits are too low and the cost is too high – high enough to suggest that we will be seeing yet another digital divide scenario. The longer Sprint can offer an unlimited data plan and the better the deal appears to be for the consumer, the better for all wireless subscribers.

And yes, we should care.

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Top Comments
  • 11 Hide
    cumi2k4 , September 26, 2011 7:31 AM
    Do we need it? Absolutely not....not if we have the elusive "reasonable" price plan other than these "cut-your-throat-oh-and-we'll-also-like-your-firstborn-too" price plans.
    If you want to cap it, we want to be able to rollover our "unused bandwitdh" too
Other Comments
  • 11 Hide
    cumi2k4 , September 26, 2011 7:31 AM
    Do we need it? Absolutely not....not if we have the elusive "reasonable" price plan other than these "cut-your-throat-oh-and-we'll-also-like-your-firstborn-too" price plans.
    If you want to cap it, we want to be able to rollover our "unused bandwitdh" too
  • 1 Hide
    nebun , September 26, 2011 12:22 PM
    what we need is Plans that start at $1per would be so much easier....look at redbox movie just works...and makes a lot of sense
  • Display all 36 comments.
  • 1 Hide
    house70 , September 26, 2011 12:24 PM
    Of course, Gruener's iphone is years ahead of anything else... Coming from him, that does not surprise me a bit. The rest of the smartphone pack matters a whole lot less, as long as his iphone is "happy". Just look at the title....
    As far as data plan goes, the rest of the civilized world has far better deals than what we get here. We have a lot of catching up to do.
  • -7 Hide
    acadia11 , September 26, 2011 12:34 PM
    Uhmmmmm ... yes, unlimited data plans are great if they weren't and actually cost the carriers less money they would all be offering them instead of trying to get rid of them.

    Stop thinking like a Republican making the good some how sound bad.

    I.e. "Stimulus" became a dirty word, "Tax's on extremely wealthy people" became bad words, "health care coverage " became a bad term, I mean ... seriously now you are going to argue unlimited data plans are a bad thing? Oh the humanity.
  • 3 Hide
    pjmelect , September 26, 2011 12:37 PM
    It's all to expensive for me limited or not, I think that I will pass on this.
  • 3 Hide
    wiyosaya , September 26, 2011 12:46 PM
    I got one of Sprint's 3G/4G usb modems to test and this is my experience:

    If wireless unlimited data, 4G only with Sprint, worked better than 3G in my area, I would dump Road Runner in favor of the Sprint 4G plan internet service in my home. However, 4G is less than half the speed at my home of 3G, and if anyone investigates Sprint's current offerings, 4G is unlimited, 3G is not.

    So there is a caveat to the "unlimited" plan that the article does not mention, and that caveat is that 3G is not unlimited, where 4G is, and with Sprint, 4G coverage is not as good as 3G. Therefore, Sprint's "unlimited" service has some built-in limits to it that some may be not aware of.

    So, if you are expecting "unlimited" with Sprint, make sure that you are in a solid 4G reception area; otherwise, their 3G service is subject to caps, and their overage charge is $0.05 / MB - that's MegaByte, Yes, MegaByte meaning $50 per GB - way more than other carriers are charging.
  • -1 Hide
    g00fysmiley , September 26, 2011 12:52 PM
    yes they do need unlimited on sprint... if they stopped thier unlimited plan then they'd have to say goodbye to alot of thier customers (me included). if they made tiered setups as an alternate thats fine for cheaper data btu as it stands I pay 64.95 per month (like 80 after taxes) for unlimited data and 450 min per month (free mobile to mobile so i rarely use more than 50 min)

    basically I'm currently happy with sprint and them getting the iphone is probably really good for the company and will make them alot of money but if they chose to not keep the unlimited plan I can see them not getting nearly as many customers as they would otherwise get
  • 5 Hide
    fball922 , September 26, 2011 1:30 PM
    I read a long article a while back talking about how capped data plans (this article in particular was referring to ISPs) are a load of crap that are essentially in place to prevent users from using data for competitor's products (Netflix is a huge competitor to VOD, in the case of cell phone providers they want you to require multiple plans to supply your bandwidth to multiple devices, such as blocking wireless tethering applications, but offering their own WiFi hotspot).

    Anyway, saying they cap data to save costs is *mostly* erroneous. Once they install the capacity to supply the bandwidth, it costs them next to nothing to deliver it. Yes they have to recoup costs, but they certainly have no legitimate reason to cap data other than to rack up those overage charges and to coax people into buying more plans.

    If they are looking to cap people for legitimate reasons, they would cap SPEEDs at peak usage hours because that is how they get billed higher up the internet tier.
  • 4 Hide
    happyballz , September 26, 2011 1:32 PM
    This guy's articles get weirder and weirder everytime. It's not a "perception" not everyone uses just 800MB, and by the time you pay 4 times for your "tierd 200MB" plan you could have actually afford the damn unlimited plan if it existed now. If you watch at least 2-3 semi-long videos in HQ you will easily go over the 4GB cap in a month. Not everyone lives in your world and thinks and acts like you, so maybe the best option here is to HAVE OPTIONS and let everyone choose what they want.
    But any way you slice it, our choice of wireless carriers is very limited an their data optinos are grossly overpriced. For as many subsidies American telcos get they should have built 7G network covering all of earth at a cheap price by now.
  • 0 Hide
    dcompart , September 26, 2011 1:34 PM
    The average consumer is not going to go to fully use unlimited data, but with the capability of smart-phones today we are going to be consuming data extremely quickly with Netflix, YouTube videos or downloading apps. If carriers want to improve the quality of their services they need to 1st allow people more flexibility with the current products people have already bought. If people want to tether within their current 2GB plan, do not charge them extra. It's just frustrating for consumers that the $/per GB is ridiculously higher with Carriers than with Cable providers.
  • 2 Hide
    AIstudio , September 26, 2011 1:44 PM
    As people consume more and more data i personally think thre is a ned for a TRULY unlimited data package.
    Before all these restrictions came in i was on an unlimited data plan and used to stream music from my server to my phone every day. I paid for the software to do that but weeks later the provider decided to put limits on its unlimited plan!!!
    Its ALL one way traffic with these providers and it sickens me!!!
    example: You pay for 500txts per month and may only use 200 in one month. You have paid for them but do you get reimbursed NO!! you go over your 500 the following month and get slammed with charges!!!! Same with air time and same with DATA plans............
    Its ALL one way traffic and it sucks!!!!!
  • 5 Hide
    daekar , September 26, 2011 1:56 PM
    I'm with practically everyone else: The existing plans are overpriced, and the lack of unlimited plans is ridiculous. In fact, one of the things that I am totally convinced of is that if I somehow lose the unlimited plan I have with Verizon on my DroidX, I'm just ditching the smartphone altogether. There's really no point in having one if you can't stream video or music... what am I going to do with that large screen otherwise? I frequently exceed 5GB/month on my current unlimited plan, and it irks me to no end that there is even a question that I would have to adjust my usage because they don't offer a plan to fit my needs. What the heck kind of market is this? "We're not going to market what you want/need, we're going to market what we want and you're going to adjust to it" - that's not customer service. Yes, they're in business to GET money, I understand and applaud that, but they're NOT in business to EARN their money. Concern about giving the customer the best product they can and pride in service is nowhere to be found.
  • 1 Hide
    Netherscourge , September 26, 2011 2:24 PM
    Considering that all Smartphones use your data connections even when you are not actually using your Smartphone, it's pretty stupid to not offer an unlimited data plan.

    AT&T, Verizon, etc... when you have your data connection turned on (non-Wifi data mode), the phone is sending and receiving small amounts of data constantly - even if you aren't doing anything with it. All your apps use the notification tracker to constantly check for new updates and to track your current location.

    It uses your monthly data allotment and you're still paying for that stuff.

    Sprint will probably be the only carrier with an unlimited plan and I hope they make a FORTUNE off it - just to get AT&T and Verizon back into competition for it.

    ...and maybe bring down the ridiculous pricing for them.
  • 0 Hide
    thently , September 26, 2011 2:41 PM
    Last few months I have used 14 gigs on my iphone I am still grandfathered in to ATT unlimeted plan so I dont even see a plan for me once the unlimited goes away unless they make a 15 or 20 gig plan...

  • -2 Hide
    halcyon , September 26, 2011 3:00 PM
    I certainly don't need it and if having unlimited data would degrade AT&T's service further, than "NO" thanks.

    I would be nice to start seeing appropriately priced data plans however.
  • 0 Hide
    thrasher32 , September 26, 2011 3:19 PM
    First off, I don't need anything for the iPhone, especially the iPhone. I'm sorry, I'm just not a brainless sheep.

    But the real question is do we need unlimited data for smartphones. I dunno, how much will it cost me? I would say unlimited data would be nice, but I'm not going to pay more than, say $25-30 a month for it, which, IMO is still a major ripoff since I can get all the cable internet I want (since I'm with Bright House) for $50 a month at many times the speed of any mobile phone data network.

    So, let's talk free texting (it doesn't cost the phone company ANYTHING), unlimited data for $15-20 a month, and $200 or less for a new phone with a 2-year contract, all bringing my total cellular bill down to around $50USD a month, and I'll reconsider dumping my cell phone and going with an ISP-based solution when my current contract is up. Or go to T-Mobile like everybody else.

    Verizon & AT&T, are you listening??
  • -1 Hide
    jacobdrj , September 26, 2011 3:54 PM
    Virgin Mobile's 35 dollar pre-paid unlimited data plan is looking better and better (with unlimited texting and 300-400 minutes talk time)... As does Boost Mobile's 55 dollar pre-paid completely unlimited plan for Android (and that price goes down every 6 months by 5 dollars) and Blackberry.

    Why do people keep sticking with contracts? It makes no sense to me at all.

    The competition is there, people are just not opening their eyes to the available options.

    I will never get a contract plan: They are a complete waste of money.
  • 1 Hide
    wiyosaya , September 26, 2011 4:07 PM
    thrasher32Or go to T-Mobile like everybody else.Verizon & AT&T, are you listening??

    T-mobil claims unlimited, but there is also a "gotcha." Go over the limit for your plan - 5GB or 10GB, and they slow your connection speed. I am not sure by how much, but that is their advertised "gotcha."

    Anyone out there with T-mobil experience care to comment on this?
  • 1 Hide
    bustapr , September 26, 2011 4:19 PM
    no, i dont think we need unlimited bandwidth for phones. dont need to be all day on internet on my phone and dont need to download anything either. And most of all dont need to empty my pockets for that. However I would like unlimited plans for laptops. Traveling, working, and occasional gaming on a laptop with unlimited 4G would be good.

    nice trolling on the last line gruener. Also cant not stare at the black guy with funny hair
  • 0 Hide
    Anonymous , September 26, 2011 4:28 PM
    I have Verizon and a 2GB / month data plan. They just turned 4G LTE on less than 2 weeks ago, so its too soon to tell. So far, the service is spotty and off/on constantly as they work out the initial kinks. Let's hope it is just that. So, one of the main reasons I want quick internet is to scan barcodes and read product reviews right there on the sales floor. So far, that hasn't worked out b/c the signals inside of the building suck, and the outside is still shaky. Oh well... its still the absolute most reliable connection/service for doing the important thing, talking, so I can't complain just yet.

    Motorola Droid Bionic
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