Throttling Smartphone Users

AT&T has formally announced what many high-use smartphone users already knew: throttling is here to stay. AT&T users on a 3G plan will be throttled at 3GB, while 4G LTE users will see throttling at 5GB. The 3G/4G differentiation is a key point, as 4G users will blow through their data far quicker than 3G (the bigger pipe means better quality video, but also greater data use – and better efficiencies for AT&T).

However, the move from AT&T, while almost inevitable, is certain to face significant opposition from consumers who have a different interpretation of what “unlimited” constitutes. To be fair to AT&T, they are not the first to define “unlimited” as something that can be throttled: T-Mobile already offers an unlimited plan which throttles data use back to a slower speed once a data limit is hit. Technically, both services still do offer the consumer unlimited access, just not at the same speed. The difference between the two services is that T-Mobile’s service was launched with throttling included, while AT&T (and for that matter Verizon Wireless) is adding it retrospectively. This is a fairly unusual step for carriers, which typically consider existing users to be grandfathered into older plans and are therefore untouchable.

The result of this approach could be a backlash against AT&T with consumers looking for alternative solutions. But what choices do they really have? Only Sprint offers an unlimited plan without speed variation, Verizon Wireless removed its unlimited plan last summer and T-Mobile is focused on throttled plans. This provides some opportunity for the regional players, but realistically, most consumers still gravitate to a national provider. Sprint could see a bump in subscriber growth due to AT&T’s move, but apart from that most consumers will grumble but likely stay where they are. Unless… one of the other carriers takes the opportunity to offer more compelling plans. While unlimited in the old sense of the word is unlikely to make a comeback, Verizon Wireless currently offers a “double data” LTE promotion (4GB for the price of 2GB for example). T-Mobile, in particular, could – and should – grasp this opportunity to launch more aggressive plans in a bid to drive subscriber use. The next few weeks could be interesting to watch.