Why AT&T's reversal to metered data usage will move Internet innovation in the wrong direction.
Starting next week, new AT&T subscribers will no longer have the option to pay a flat fee for unlimited data, as they have since the dawn of our smartphone economy. Many users may end up saving money under the new pricing plan, but the demise of unlimited data will likely have a more negative impact on how people use their devices, how start-ups develop new applications, and the advancement of the Internet itself.
When the iPhone launched in 2007, AT&T (T) charged $20 a month for unlimited data, $10 less than the flat fee iPhone 3G/3GS and iPad users paid, unless the latter group opted into a lower data plan for $14.99. Current unlimited data users, as well as iPad 3G buyers who order by June 6, will be "grandfathered" in -- those users will not see their plans change until their contract is up for renewal. New subscribers will encounter two new options: $15 a month for 200 MB, with $15 for every extra 200 MB, and $25 a month for 2 GB, with a rate of $10 for every extra gigabyte.
The carrier, which is the first major one to make this move, says the goal of its new strategy is to give subscribers more choice.
According to AT&T's own research, 65% of its users download 200 MB or less, and 98% use 2 GB or less each month. If that's the case, users who keep close tabs on their data usage could stand to save as much as $15 a month.
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