AT&T Ends Overages as T-Mobile Ditches Data Plans

A day after AT&T announced it would stop charging customers who exceed the limits of their data plans, T-Mobile announced an end to data plans.

AT&T, T-Mobile, overage fees

In the horse race that is the U.S. wireless industry, AT&T announced Aug. 17 that it was doing away with one of the greatest pain points in wireless: overage fees.

Beginning Aug. 21, AT&T will offer Mobile Share Advantage Plans, which won't charge customers for exceeding the data limit of their plan.

The new offer comes in seven sizes: 1GB for $30 (per month); 3GB for $40; 6GB for $60; 10GB for $80; 16GB for $90; 25GB for $110 and 30GB for $135. Each of those comes with Rollover Data, unlimited talk and texting in the United States, and unlimited texting from the United States to more than 120 countries.

AT&T also revised its largest plans. It's now offering a four-phone plan with 25GB of data for $190 per month or $215 with 30GB. Up to 10 lines can be added to each plan.

There is some small print to note.

The starting monthly fee is now higher though more data is involved (Mobile Share Advantage starts at $30 for 1GB of data, versus $20 for 300MB).

Also, T-Mobile did away with overage charges back in 2014, and Sprint and Verizon have since followed (though Verizon will charge you $5 for that peace of mind, which it calls "Safety Mode").

In addition, while AT&T won't charge you for going over your agreed-upon data allotment, it'll knock you several rungs down the high-speed ladder when you do, to 2G. Or "a maximum of 128K bps."

What can you do at 128 K bps? AT&T says it's enough to check email and view the web, but pretty much forget about audio and video streaming, and picture and video messaging, and lots of apps and services won't work at all.

Still, there's plenty to be said for not flinching when a bill arrives. And of course, for some time now, AT&T's competitors have been saying it all, perhaps none as loudly or as enthusiastically as T-Mobile CEO John Legere.

Giving AT&T a few hours to enjoy its news cycle, Legere posted a video to Twitter the morning of Aug. 18, announcing T-Mobile was doing away with yet another pain point—and the reason overages are a pain to begin with: data plans.

"Surprise. I'm here to announce Uncarrier 12," Legere said in a pink-hued video, speaking to the camera. "I declare that the era of the data plan is over. We are completely destroying the whole concept of a data plan. It's gone. We have one single offer that banishes data buckets forever."

Legere goes on to say that data plans are the biggest pain points in wireless today, that people hate limits on their data, and that AT&T and Verizon couldn't make the same offer, even if they wanted to.

"In fact," Legere grins, in a close-up, "I challenge them to try."

The T-Mobile offer will be available starting Sept. 6. T-Mobile is offering $40 a line for four lines, with unlimited LTE-speed data, where available. The first line is $70 per month, the next is $50, and each additional line, up to eight lines, is $20. (Add, divide by four, and it's $160 a month for four lines, or $40 each.)

In the video, Legere makes the point that people either use too much data and are "slammed with overages." Or, nervous to go over, they hold back, and wind up paying for something they didn't use.

"People spend about $30 billion overbuying data," said Legere. In 2015, Vocativ put that figure at $37 billion a year, or approximately $27.86 per month, per American.

Legere went on to say that 79 percent of people believe the carriers offer data buckets for that reason, just to make extra money.

"And they're right," Legere said. "Just yesterday, AT&T jacked up prices on all their data buckets again. If you're not pissed off already, you should be," he added.

Jan Dawson, chief analyst at Jackdaw Research, pointed out in a blog post that there's plenty of context for the T-Mobile announcement, beyond altruism.

"The headline from T-Mobile is about simplicity and unlimited for everyone, but the upshot of this new pricing is that the base price for postpaid at T-Mobile just went up quite significantly," Dawson wrote. "And the reason for the move is that Un-Carrier is losing momentum and T-Mobile needs to boost growth again."

While the new plan, for one line, starts at $70, the current plans makes it possible for an individual to get started for $50.

"Anyone can offer unlimited if they price it right, which is why you see T-Mobile pricing it at roughly the same price as 10GB plans under its previous options. … There's a cost to unlimited, and if it's truly unlimited rather than being throttled to 480p, it costs more," added Dawson. "This is really just a question of pricing, but that's why T-Mobile's pricing is going up here — it's not magic, just economics."