Dominoes fall: U.K.’s O2 follows AT&T iPhone data caps

dominoesIt’s far from surprising but notable nonetheless: O2, which after AT&T is probably the most notable operator shilling the iPhone, has posted its iPhone 4 pricing and … no more unlimited data plans. AT&T, of course, drew both industry attention and customer ire for its similar move last week.

Engadget has a few additional details:

It looks like your beloved “unlimited 3G” plans of are a thing of the past — instead, you’ll be paying for up to 1GB of data of month. As you approach the limit, a text message will notify you and let you purchase an 500MB for 5 or 1GB for 10. How very AT&T of them, eh? But don’t worry, kids! Texting is still unlimited.

fitchardiconConnected Planet’s take,
Kevin Fitchard:

AT&T a trendsetter? imagine that. Of course, AT&T dove in to tiered data more out of necessity than a desire to reshape the way the world consumes mobile data, but either way carriers are starting to follow its lead. I imagine other Apple partners will follow as they, too, deal with the data deluge the smartphone has encouraged on their 3G networks.

What’s interesting about O2’s plans, though, is they don’t have tiers, at least not in the same sense as AT&T’s plans. O2 is bundling data with its minute plans, awarding 500 MB to 1 GB buckets as you move up the plan list. It’s most-basic iPhone plan weighs in at $36 a month, coming with 500 MB, while the most expensive, for $88 a month, comes the full 1 GB. Beyond those caps, though, the data charges become completely egalitarian. They come to about $1.50 per 100 MB, regardless of what plan you’re on. In contrast, AT&T is clearly delineating two types of data users, light and heavy, and charging vastly different rates for both. Its 200 MB plan costs $15 and going over will cost you $15 for another 200 MB. It’s 2 GB plan costs $25 with an additional charge of $10 for each additional gigabyte. Even if we assume that the cost of providing an always-on connection is factored into the initial plan rates, there is still a huge discrepancy in how much AT&T charges for additional consumption based on your plan: 8 cents a megabyte versus 1 cent a megabyte.

I’ll give AT&T credit for kicking off usage-based pricing. It needed to happen, and AT&T was willing to incur wrath of the blogs and the mainstream media. But it looks like other operators are already starting to innovate where AT&T left off just a week ago. It probably sounds ridiculous to say this now, but the next battle over mobile data won’t be about who offers unlimited versus who offers caps, but over who offers the fairest usage-based plan (i.e., who charges fees that most accurately reflect a customer’s impact on the network). AT&T doesn’t have much to worry about now. O2 is in a prickly position, as all of the other 3G operators in the U.K. also offer the iPhone, while AT&T currently has an exclusive. O2 has to make its low-end plans extremely cheap or risk customers simply taking their iPhones to another network.

That’s our take on this. Let us know what you think in the comments section below:

One Response to “Dominoes fall: U.K.’s O2 follows AT&T iPhone data caps”

  1. Mike says:

    Honestly people (Heavy Data Users) are Smart enough to realize that the pricing is going to get to high and with available WMAX and phones to show up shortly (if needed) :) will exit the phone service giants business in mass. Let’s not kid ourselves competition for the money in the United States is already brewing.

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