Sprint Corp. and T-Mobile US Inc. recently said they would scrap data caps and give customers a simpler option: unlimited everything at a single price.
But the plans had restrictions. Days later, both carriers unveiled “premium” unlimited plans that cost $20 to $25 more a month. And even those had limitations.
“The truly unlimited plan doesn’t yet exist,” said Fredrik Jungermann, managing director of Tefficient, a telecom analytics firm. If the carriers sold unlimited plans without restrictions, “they might get users that would use hundreds of gigabytes a month or even thousands, and they wouldn’t get even a single dollar more for them.”
The latest round of unlimited offerings highlights the tactics carriers use to win customers in the competitive wireless market, and the maze of fine print that can catch consumers off guard. The new plans don’t have a hard ceiling on usage, but put restrictions on everyday behaviors.
Take T-Mobile. The carrier said Monday its T-Mobile One plan is “a radically simple subscription to the mobile internet at one low price” with “unlimited everything.” The carrier’s website is decorated with an oversize infinity sign.
But the more than 450 words of fine print on T-Mobile’s site describe the caveats. Video is delivered at a lower quality, internet speeds might get throttled after using 26 gigabytes in a month, and if a device is turned into a Wi-Fi hot spot, a practice known as tethering, it could be slowed.
On Monday, the carrier unveiled “T-Mobile Plus,” which allows consumers to pay an extra $25 a month to get faster Wi-Fi tethering and higher-quality video streams—but consumers must open an app to turn on higher-quality streams every day they want to use it.
Sprint launched its “Unlimited Freedom” plan in mid-August with limits on video, music and gaming streaming. On Friday, the company added “Unlimited Freedom Premium,” which is $20 more a month and allows for higher quality streaming than the original offering.
A Sprint spokesman said most customers can’t differentiate between low- and high-quality video on smartphones because the screens are small. But the carrier wanted to offer a premium plan with high-quality video for the “segment of the population that wants the absolute very best.”
Verizon Wireless doesn’t offer any unlimited plans, and AT&T Inc. only sells unlimited to customers who also pay for one of its pay TV services, DirecTV or U-verse. That plan also comes with restrictions, including not allowing Wi-Fi tethering and customers potentially getting throttled after 22 gigabytes of monthly use.
To be sure, that is far more than the 3.7 gigabytes North American smartphone users typically consume each month, according to telecom equipment maker Ericsson. But for most people, it wouldn’t be enough to replace a home broadband subscription.
For the smaller carriers, these new “unlimited” plans are also a subtle way of eventually raising prices. They start at $60 or $70 a month, and the companies say they might eventually eliminate cheaper options with limited data.
Offering the “premium” version of unlimited plans helps comply with the Federal Communications Commission’s net neutrality rules, upheld in court in June, that prohibit internet providers from slowing down, or “throttling,” particular apps or entire classes of services.
Wireless carriers have so far been allowed to offer plans with throttling as long as they offer multiple plans and the throttling is clearly communicated to customers. FCC Chairman Tom Wheeler has said the agency was keeping a close eye on these types of plans that provide free data or treat traffic differently.
An FCC spokesman declined to comment on the specifics of the T-Mobile and Sprint plans, but the agency’s “informal policy review is ongoing.”
T-Mobile Chief Operating Officer Mike Sievert said the company supports an open internet, but “that means different things to different people.”
Paul Gallant, a policy analyst at Cowen & Co., said the plans were procompetitive. “These lower-priced unlimited plans—even with [low quality] video—could put pressure on Verizon’s and AT&T’s data caps,” Mr. Gallant wrote in a research note.
Matt Wood, policy director at Free Press, a net neutrality advocate, said the trend toward offering more data is a good thing. But he is wary of how carriers, rather than consumers, choose what gets throttled.
“Some users might indeed be glad to have the choice of an uncapped plan streaming at a slower speed,” he added, “but $25 per line sounds like a pretty huge sticker price for those who want higher quality instead.”
[Source:-The Wall Street Journal]
