As T-Mobile Moves to Unlimited Data, Questions Remain: Analysts

While T-Mobile will drop data limits on mobile users, it will then add new fees for tethering and higher resolution video playback.  

T-Mobile, mobile carriers, Verizon, AT&T, data limits, unlimited data, smartphones

Within 24 hours of AT&T announcing that it is dropping data overage fees for its customers, T-Mobile said it will get rid of data-based mobile service plans, giving its customers access to unlimited data on their smartphones.

Under AT&T's plan, once customers reach their existing data limits, instead of overage charges, they will receive lower 128k-bps speeds, which will slow their Web use but allow them to continue to use some services.

But under T-Mobile's latest Un-Carrier 12 move, which it is calling its T-Mobile One unlimited data plan, customers will get unlimited data for $70 a month for the first line, $50 for the second line and $20 for each additional line, up to eight lines, using automatic payments. T-Mobile One will be available starting Sept. 6.

There are, however, some caveats to the deal. The included unlimited video viewing is at typical DVD quality (480p), rather than in HD quality, and device tethering is not included but is available at extra cost each month. Customers who want HD video quality will pay an extra $25 a month, while LTE tethering is available for $15 a month.

What T-Mobile's latest wireless move will mean for consumers will shake out in the near future, mobile industry analysts said.

"Clearly, they see the 'unlimited' message resonating with consumers more strongly than claims about network speeds and coverage," Bill Menezes, an analyst with Gartner said in an email reply to an eWEEK inquiry. At the same time, though, with "all the caveats on the plan, I doubt AT&T and Verizon will feel much pressure to offer standard unlimited data plans" of their own since most of their customers stay within their fixed data plans.

"T-Mobile continues to hedge its network performance bets by only including lower-resolution video in the 'unlimited' proposition," wrote Menezes. "You have to buy up to a higher data rate to watch HD video, which most customers probably won't do. Tethering also has an added surcharge, which is a disincentive for customers to consume the huge amounts of mobile data they could use by tethering several devices to a T-Mobile phone for gaming [and more]."

Dan Olds, principal analyst at Gabriel Consulting Group, called the T-Mobile move "a huge shot across the bow of the other wireless carriers," which by removing limits on data, "is directly attacking a big profit center for many carriers."

Many wireless customers today buy larger data plans than they need each month just to protect themselves from potential overages, he wrote. "With this new all-in unlimited plan, T-Mobile takes away that fear by levying a single charge for unlimited data. This is going to put a lot of competitive pressure on the other carriers to match the plan, or else risk losing some of their most profitable customers—those who have signed up for big data plans. This is going to roil the wireless industry for sure."

Another analyst, Charles King of Pund-IT, said T-Mobile's move is "definitely making headlines, and is somewhat indicative of the increasing commoditization of wireless data services," but noted that the fine print about the extra-cost video speeds and tethering options "could make the new services less popular than T-Mobile hopes."

At the same time, he told eWEEK, "it definitely gives other carriers something to think about. If T-Mobile appears to be getting traction, as it did with ending two-year contracts, you can bet other vendors will try to follow suit."