Why Tiered Data Plans Are Bad For Customers

Enjoying the new FaceTime feature on your iPhone? You might not be soon when you realize how much bandwidth it uses. Tiered plans are going to force us to limit how we use our smartphones. I just checked my data usage, and I have downloaded over 1 GB of data in the last two weeks. Granted, my increased usage is due to steaming World Cup video along with  the new Android Sirius app, but why should I be forced to watch my data usage? As a customer, I enjoy the freedom in using my smartphone anyway I like.

AT&T started the unfortunate trend of service providers forcing tiered plans. AT&T’s new tiered plan offer 200MB per month for $15 and 2GB for $25. Verizon is rumored to be next. AT&T’s argument is that their new data plans offer choices for customers. I would buy that argument if they offered cheaper plans along with the unlimited data plan. However, AT&T took the unlimited option away from customers. If AT&T wanted to give users more Options, then why did they take away the unlimited option?

The timing for tiered plans is also odd with new 4G networks already in use. Sprint had its 4G network available and Verizon’s LTE network will be available at the end of the year. The new 4G networks offer up to 12 mbps data rates, which are faster than my cable modem. Offering faster speeds finally allows quality video streaming, but video eats up data. Restricting data usage while at the same time offering faster data rates is simply a ploy for service providers to make more money.

Innovation will also suffer as customers watch their wallets and how much they downloaded. Hulu just announced an app for iPhone and  iPad. The increased costs of the tiered data plans will stop people from using Hulu along with other steaming intensive apps. Slingbox, FaceTime, Skype, MobiTV, Ustream, Qik, YouTube, and audio steaming apps such as Pandora and Sirius will see less usage.

As tiered plans take over, expect your browsing and steaming freedoms to go away. Expect to start asking if you really want to use this app because you’re close to your data cap. Here’s hoping Sprint, T-mobile, and other service providers don’t follow AT&T’s path.