T-Mobile Drops Cap on Mobile-Broadband Data Usage
T-Mobile has announced that it will end a 5 gigabyte-per-month data usage cap on its mobile broadband service. T-Mobile has changed its mobile data pricing plan to cut overage charges for customers of its 200 MB plan in half, and remove them entirely for customers who pay $59.99 per month (or $49.99 per month without a contract) for its 5 GB plan. Is real competition coming to the wireless industry, or is this the end of flat-rate mobile broadband? It may be both.
The move is aimed at signing up customers in an increasingly competitive mobile broadband market. Clearwire (CLWR), Sprint (S), and the cable companies are already selling WiMAX, which can deliver up to 6 Mbps downstream and 1 Mbps up. Verizon Wireless (VZ, VOD) is preparing for the launch of its LTE service during the fourth quarter of this year. AT&T (T) will follow with LTE in 2011.
All of which is good for consumers. But as far as T-Mobile's lifting of its 5 GB-per-month cap, there's a catch: Go past that limit and download speeds will slow. T-Mobile tries to play down such a caveat, however, saying: "When used as a mobile broadband solution in conjunction with an existing home broadband service, only a very small number of customers use more than 5GB per month."
But from now on, that number will only rise, as consumers are downloading ever more data, especially to watch video. So wireless providers, which have limited spectrum and a demand curve that resembles a steep uphill climb, are reevaluating how they charge for mobile broadband (GigaOM Pro, sub req'd).The end of the flat-rate pricing is coming (GigaOM Pro) and the jury is still out as to how carriers will implement new options (GigaOM Pro).
T-Mobile's decision to slow speeds after a user hits 5GB per month is likely an answer to Clearwire's unlimited mobile broadband offering, while also protecting the carrier for overloading its cellular network with a corresponding policy change. And as the next generation of wireless networks hit the market, such plans will become increasingly common.
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