Wireless Customers Want Unlimited Data: Study - InformationWeek

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Commentary
11/22/2010
04:39 PM
Eric Zeman
Eric Zeman
Commentary
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Wireless Customers Want Unlimited Data: Study

A new report coming from research firm Sanford Bernstein shows that most smartphone users want to keep their unlimited data plans.

AT&T and Verizon Wireless have stirred up the ire of customers with their new, tiered data pricing models. Both companies introduced new data plans with drastically lower caps on the amount of data customers could use in a given month -- albeit at lower price points. The Sanford Bernstein study says that lower cost or not, people want unlimited data plans and will pay more for them.

Back in June, AT&T eliminated its $30 unlimited data plans for new customers. It replaced them with 2GB for $25 and 200MB for $15. This, says AT&T, has opened up its services to a new group of customers. Mark Siegel, AT&T spokesperson, told CNet in an interview, "We have found that our customers in fact like usage-based billing. They appreciate having choices in data plans. This is probably because a majority of customers can reduce their costs through our plans."

Thankfully, AT&T allows existing smartphone customers to keep their $30 unlimited plans when they upgrade to a new device. This is what I did.

Verizon Wireless followed suit. It is offering 150MB for $15 per month, but retained the $30 unlimited monthly data plan.

Craig Moffett, an equities analyst with Sanford Bernstein, wrote, "Unlimited data plans could become a major source of differentiation, attracting customers and giving still-unlimited carriers a subscribership boost. At the same time, however, carriers who maintain unlimited pricing in the face of AT&T's move to usage based pricing could self-select to the heaviest users, impairing future profitability."

What's interesting is that customers are willing to overpay for data. For example, many users don't surpass 200MB in data per month, which is why AT&T picked that data point. Even so, customers are willing to pay for far more data than they need for fear of exceeding their monthly limit and being hit with overage fees. Most people over-estimate how much data they use, and then overpay for it, despite the economics proving they could save money each month.

Moffett noted, "The new conventional wisdom is that carrier loyalty has been replaced with loyalty to the device. But high inclination to switch carriers and phones to maintain an unlimited plan suggest that perhaps the plan itself is more important than either one."

[Via CNet]

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