AT&T's Meter Is Just the Beginning

I seem to have made a few enemies in badmouthing AT&T's (NYSE: T  ) plan to stop offering unlimited data plans to new smartphone and Apple (Nasdaq: AAPL  ) iPad owners next week.

Your comments hit me from seemingly mutually exclusive sides, with some arguing that AT&T is doing the right thing to improve its bottom line, while others argued that the new plans will save them a good chunk of change.

I'm fully aware of scenarios where that can happen. AT&T may scare away its most gluttonous data hogs. The lower-priced data plans may attract thriftier wireless customers.

However, few of my respondents seem to understand is that this is just the beginning. Does anyone remember the first airline carrier to begin charging passengers for checking their baggage? It's irrelevant these days, because nearly every carrier does so. (Thanks for holding out, Southwest.)

A few of the iPhone owners who commented yesterday -- and thank you for that, because I appreciate all forms of feedback -- were quick to point out that they used far less than the 2-gigabyte ceiling, because they mostly took advantage of the faster Wi-Fi that was available around the house.

What do you think will happen after rival wireless carriers begin following AT&T's lead? The limits will begin to work their way through broadband providers, too. Comcast (Nasdaq: CMCSA  ) already came under fire two years ago for capping usage on its biggest bandwidth hogs. Once it becomes acceptable to sell broadband by the gigabyte, what will stop them from adopting similar pricing plans for home Internet users? How comfortable will you be on that 200-meg or 2-gig data plan when your Wi-Fi at home is also no longer a safe haven to surf freely?

I love Europe, but I think metered pricing through most of the continent is part of what has kept usage -- and upstart ingenuity -- in check abroad.

Unlimited sells. Even if a smorgasbord has to lose a little on some of its heaviest eaters, it's a worthwhile endeavor to keep the value proposition going if it's profitable at the end of the day.

Does anyone think that Netflix (Nasdaq: NFLX  ) would be as popular today if it had never offered the illusion of unlimited DVD rentals and infinite streaming? Domestic consumption of Google's (Nasdaq: GOOG  ) YouTube videos has nearly doubled over the past year. Do you think it would be growing this quickly if every sneezing panda or waterskiing squirrel were on the clock?

I don't like where this is heading. You shouldn't, either, especially if you're an active Internet user or invested in companies such as Netflix and Google that thrive on the promise of open-ended, thoughtless connectivity.

AT&T's stopwatches are just the beginning, my friends. Can I check that bag for you?

Will the end of unlimited data plans be a game changer? Share your thoughts in the comment box below.

Google is a Motley Fool Rule Breakers recommendation. Apple, Southwest Airlines, and Netflix are Motley Fool Stock Advisor picks. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz wonders if AT&T's overtaxed network is why his iPhone turns into a paperweight when he hits Sun Life Stadium with 75,000 fellow Miami Dolphin fans. He does not own shares in any of the stocks in this article, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On June 04, 2010, at 12:02 AM, ronennakash wrote:

    I don't like it either. However, our hope here, as it is with almost anything that has to do with better prices and offers, is the free market. And although even here we are heading towards more control from a left leaning government, the market is still free enough for new companies to come with, er, unlimited offers. Just recall MetroPC and Boost to name a few...

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