AT&T announced new data rates yesterday. These rates apply to all of their smartphones, including the iPhone. Unfortunately, many of the headlines focused on the negative side of the new rates. One New York Times headline was: "AT&T Eliminated the Unlimited Data Plan." MobileCrunch ran the sarcastic headline "Be thankful that AT&T is looking out for our best interests" and says "Like a wise king, AT&T has decided for us, its loyal subjects, that
all we need really in life, in the totality of existence, is 2GB
of data per month—or, for some of us, only 200MB of data! Either one!
You see, AT&T simply knows more than any of us could ever hope to
know. Thank you, AT&T, for being a shining beacon of hope in our
otherwise bleak, bleak world." AppAdvice opts for the direct approach instead of sarcasm: "AT&T Makes Their Plans Even Crappier." I realize that almost any new plan will be better for some and worse for others, but to me it seems that those headlines are wrong and that AT&T's new plan will end up being cheaper for most, and fairer for all. [UPDATE: To be fair to the New York Times, David Pogue's article posted Thursday afternoon is very consistent with my view.]
The Plans. Here are the new monthly plans:
- $15 for 200MB. This is the "DataPlus" plan and AT&T says that 65% of its users use less than 200MB a month. For example, looking at the data usage on the AT&T website, I see that my wife falls into this category.
- $25 for 2GB. This is the "DataPro" plan and AT&T says that 98% of its users use less than 2GB a month. I fit into this category; I rarely go above 500MB a month, and indeed I haven't gone much over 5GB total 3G data in the 11 months I've owned my iPhone 3GS, so 2GB in a single month seems extravagant.
When you get close to the monthly limit, AT&T says that it will send you a text message warning. The AT&T Facebook page says: "We want to help you know how much data you’re using to avoid any surprises. So to keep you up to date we will send text notifications – after you reach 65 percent, 90 percent and 100 percent of the threshold. We’ll also send you email alerts if we have your email address." If you are on the $15 plan and you go over 200 MB, AT&T will charge you another $15 for another 200MB. If your billing cycle isn't over, you can instead upgrade your account to the $25 for 2GB plan, although it is unclear to me whether you can then change back to the $15 plan in the future. On the $25 plan, if you go over 2 GB, you get charged $10 for another 1GB of data.
For most people, the new AT&T rates will reduce your AT&T bill. For example, Ted Landau wrote on The Mac Observer that he uses just over 200MB a month and his wife uses under 200MB a month. That means he will get the $25 plan, his wife will get the $15 plan, and the total is $40 — less than the $60 they pay now for two unlimited $30 plans. Ted's situation mirrors my own (except that my law firm pays for my data) and I suspect mirrors many others. Although AT&T points out that 65% of its users use less than 200MB a month, John Gruber points out that this is all AT&T users, not iPhone AT&T users. Nevertheless, there are clearly many iPhone users who use less data and can now pay only $15 a month.
If you are a current iPhone user and you want to keep paying $30 a month to get unlimited data, AT&T says that you can do so — even if you decide to buy a new iPhone, according to TUAW. I know that AT&T's statistics say that there are 2% of users going over 2GB a month, but it seems to me that this is difficult to do. I suppose if you never have Wi-Fi access and you always rely on 3G, and you download a bunch of video, then you might have that much data use. I'd be interested to hear from any of you who use more than 2GB a month to find out how you are doing it.
Tethering. Another advantage of the $25 plan is that users of that plan have the option to pay $20 for a month of tethering, allowing you to turn your iPhone into a Wi-Fi hotspot, sharing your 3G data connection with other devices. According to TUAW, AT&T says that the $20 tethering is not a plan, just a feature that you can add when you want it and then drop it in a future month. Some are complaining that tethering should be free as it is in many other countries, especially since AT&T doesn't raise the 2GB cap at all when you pay the extra $20 for tethering.
The ability to tether presents an interesting situation for iPhone owners who are thinking about buying an iPad. If you already own an iPhone, should you buy an iPad 3G or a Wi-Fi iPad? I'm not so sure. The 3G model of the iPad will cost you an extra $130 up front, plus you will have to pay for data every month (the same $15 or $25 plans noted above). If you are like me and you know that you are going to get the $25 plan for your iPhone anyway but you don't plan to use all of that 2GB a month on your iPhone, it may make the most sense to just spend the extra $20 a month to enable tethering and share your iPhone data with a Wi-Fi iPad. How the math works out depends upon how much data you plan to use with your iPhone and your iPad. Macworld created a helpful chart in one of its articles, showing for example that if you don't plan to use much data on either device, it makes sense to get a $15 plan on your iPhone and a $15 plan on an iPad 3G, but if you plan to use over 200MB a month on each device, you can tether for $45 ($25 + $20) versus the $50 that you would spend on two DataPro plans. Thus, you save $5 every month, and you don't have to spend the extra $130 at the outset for the 3G version of the iPad. But of course there are downsides too; the iPhone and the iPad need to be in the same room for the 3G data to work on the iPad, so if your spouse borrows the iPad and leaves the house, there won't be any data until he or she finds a Wi-Fi hotspot. Also, if you are a heavy 3G data user, by paying $50 both your iPhone and your iPad can use up to 2GB on each. If you plan to tether your iPhone to a laptop, I can see you using close to 2GB a month. On the other hand, if the only thing that you are going to tether is the iPad, it would be hard to use over 2GB on both devices unless you are streaming a lot of video (such as watching Netflix movies) and I would think that you would always want to stream video over a high bandwidth Wi-Fi connection, not 3G. So as you can see, there are a lot of variables here, and the right answer will vary from user to user.
I know that some iPad owners have a Wi-Fi iPad coupled with a MiFi from Verizon and are paying $60 a month for 5GB of data. If you don't really need that much data, $20 a month to share your 2GB of iPhone data with your iPad seems like a relative bargain. Indeed, even if you do need to use up to 5GB of data and pay the $10 per GB AT&T overage charge, you are still only paying $50 to add 5GB tethering to your iPhone versus $60 for the monthly MiFi fee — which you must pay every month, even the months that you don't need more than 2GB. Duncan Davidson noted on his blog (link via Daring Fireball) that if he had been tethering an iPhone instead of using a Sprint EVDO card for the last six months, he would have saved $260 over the last six months. (By the way, Thomas Fitzgerald wrote an article in yesterday's New York Times comparing the MiFi and similar devices.)
UPDATE: As Josh Barrett and I have been discussing today in the comments to this post, and as noted most recently in this Engadget post Thursday night, there is a question whether the iPhone can be tethered to the iPad. Apparently, Apple requires iPhone tethering to be over USB or Bluetooth, the iPad doesn't have USB, and the iPad would need a software update for it to be able to tether via Bluetooth. Of course, all this means is that the iPad needs a simple software update. We'll have to wait and see how this all plays out once iPhone Software 4.0 is out. It would be a shame if Apple blocks iPhone-iPad tethering when there is no technical barrier.
AT&T's Interests. Of course, I'm sure that AT&T isn't changing its plans just to lower rates and be generous to customers. These new plans allow AT&T to charge much more to those 2% of all users who are using a ton of 3G data every month. If this is you, prepare to pay more. But it seems fair to me for them to pay more and the rest of us to pay less.
Moreover, I'm sure that AT&T knows that over time, people will be streaming more and more data on their iPhones. AT&T is setting the stage now for charging more in the future to the users who take advantage of future data-rich uses of the iPhone. For example, the rumor is that the next iPhone will have a front-facing camera to allow video chats, and I can envision many teenagers having long video chats and using a whole bunch of data. If your children fall in this category, protect your pocketbook by making sure that they use Wi-Fi, not 3G, to do so. And I'm sure that people will stream more background music once iPhone Software 4.0 allows apps to run in the background.
Overall, though, I like the new AT&T rates. A lot of people will save money, and everyone pays closer to their fair share. Of course I also wish the tethering fee was lower (or nonexistent), but I suspect that many will consider it worth it.
