AT&T Limits Its Grandfathered-In Unlimited Data Plan; Sprint Could Benefit With 4G iPhone 5

AT&T has tried to match Sprint in the marketplace as a price leader in data plans. But a new report today reveals that the U.S. mobile giant is using limitations and data “throttling” once users reach a data usage threshold, possibly shuttling subscribers to Sprint once the 4G iPhone 5 is released.

Anyone who uses a smartphone has had to make themselves aware of the pricing games that mobile carriers play with users when it comes to data usage. Sprint, America’s third-largest mobile carrier, has made its unlimited data package the crown jewel of its price-leading marketing strategy, and arguably has remained competitive only because of it (even gaining the iPhone has yet to solve Sprint’s earning issues). AT&T and Verizon, both of whom compete as product leaders in the mobile market, have long since abandoned an attempt to compete against Sprint’s unlimited data plans. But for even AT&T’s customers who are grandfathered into AT&T’s old unlimited data plan, remaining unlimited will now come at a price in service quality.

A new report making the rounds today reveals that any attempt that AT&T is making to characterize their unlimited data plan as truly unlimited has officially lost its believability. The San Mateo Daily Journal explains that AT&T will “slow down service for its ‘unlimited data’ subscribers when they hit 3 gigabytes of usage within a billing cycle [and 5 gigabytes for 4G LTE]. Previously, the company had been throttling service when subscribers entered the heaviest 5 percent of data users for that month and that area.” To be sure, if you’re a non-unlimited data plan AT&T customer, this comes as good news, as the dreaded “throttling” will not be applied to your account. But for those who still enjoy unlimited pricing, throttling is coming.

If you’re not familiar with data throttling, you should be: it constitutes a dramatic slowdown in data transfer, making the mobile smartphone experience excruciatingly painful — especially for those accustomed with AT&T’s industry-leading speediness. And ironically, this throttling will tend to affect grandfathered-in unlimited data users who tend to use heavy-duty data, such as for watching movies. For them, the days of enjoying unlimited data and AT&T’s best speeds are over.

AT&T cites the reason for data throttling is to better manage their busy data traffic, which in turn will improve services across the board for all AT&T subscribers. But while this might be a winning strategy for AT&T, it could ironically push some of the most heavy-duty smartphone geeks over to Sprint once the iPhone 5 is released.

iPhone and other smartphone users who were able to remain on AT&T’s unlimited data plan with no restrictions on service quality have been happy to do so, giving them access to the best of both worlds: AT&T service quality and reasonable pricing. But if AT&T iPhone subscribers have to choose between price and performance, they very well may consider jumping over Sprint, since they too will ostensibly offer the iPhone on their own 4G LTE network.

Finally, Sprint could manage to garner all remaining subscribers in the marketplace whose primary object is to find a carrier who will give them steady service and an unlimited data plan. All Sprint will have to do is make sure that their 4G LTE network actually works. And with Sprint, that still remains in question.

For The iPad 3, 2012 Could Be “The Year of the Price

Tech speculators are looking to Apple’s choice of processors in the upcoming iPad 3 as clues that Cupertino will continue to keep its tablet prices steady. But with all the excitement surrounding the next iPad, this could be the year that Apple really cashes in.

When it comes to setting price for new products, production and components costs factor heavily into the decision. If you traverse the tech wires, then doubtless you’ve seen itemized price breakdowns of the iPhone and iPad, which reveal a better-focused profit margin for what each sold unit brings in. (Apple’s hefty marketing budget also has to be taken into account as well.) To this end, tech analysts are weighing the possible price of the iPad 3 (and iPhone 5 as well) based on which chipsets they decide to go with.

Planet Insane today asserts that, “Although bringing in the Gobi 5 chipset will not help solve the two or four core dilemma of Apple, it seems to be a good choice for the incorporating LTE in Apple’s mobile devices that will be launched this year. Moreover, this may give them significant savings when it comes to the cost of their production and allow their iPhone 5 and iPad 3 to stay in a similar price range for all its other introductory devices.” Much of this thinking is based on the fact that the Gobi 5 will also work with different network connection technologies, essentially creating “one chip to rule them all.”

As a result of this thinking, many believe that the iPad 3 will retain its price point, with the intro model coming in at $500. But for as much as the economics of the chips in the iPad 3 would enable Apple to keep their priced fixed, why would they bother?

Most recent data reveals that Apple’s iPad 3 is poised to dominate the tablet market in new ways that will make its already domineering history seem squalid. We’ve already reported on several eyebrow-raising reports about how a super majority of Kindle users are ready to purchase the iPad 3, and that prospective users essentially aren’t concerned about its price. It appears that the prospect of a 4G LTE iPad 3 will, according to tech analysts, drive massive sales, price hike or not.

So, why wouldn’t Apple take advantage of the public’s seemingly blank check for purchasing the iPad 3? For the first two generations of the iPad, Cupertino has maintained a price-to-value-leading price point in order to dominate the market, forcing competitors to cede the premium tablet segment of the market to Apple and offer cheaper, smaller, lower-profile tablets like the Kindle. But now, even that market model seems to be failing; the tablet market belongs to Apple, and I think they will suck it dry.

After all, the teaser photo of the iPad with no home button already has people second-guessing the notion that the overall form factor and chassis of the iPad 3 will be a mere refresh of the iPad 2. We suggested the outside chance of a new iPad 3 form factor back on February 8th. If Apple delivers on a new tablet design that shocks and awes consumers, the sales explosion will be colossal.

It is also worth noting that all of these late-breaking perspectives about chips and pricing refute much of what has already been said about the iPad 3 pricing. We reported in the past on how adding 4G LTE into the iPad mix could drive up prices, and that new components and form factor would actually drive costs up for both the iPhone 5 and iPad 3.

It is just a hunch, but I don’t think this is going to be a “refresh” year for the iPad by any measure. Apple will be overhauling the iPad, but in design and quite possibly by price.

 
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