No More Free Lunch For iPhone Data Users?
Posted 12/03/2009 at 8:31am
| by J.R. Bookwalter
Eric Savitz of Barron’s Tech Trader Daily proposes a scary scenario for Apple’s iPhone future:
No more all-you-can-eat data plans.Savitz compares the dilemma to the recent moves from Rupert Murdoch to eliminate free newspaper content on the web and Hulu’s intentions to eliminate free TV show viewing, claiming unlimited data plans for the iPhone may be next to go.
At least that’s the opinion of Bernstein Research analyst Toni Sacconaghi, who muses in a research note that hugely popular handsets like the iPhone have created nothing but headaches for carriers like AT&T. Such data-hungry devices have taxed 3G networks, creating degraded network performance, extremely vocal customer dissatisfaction, higher capital spending and ultimately, a lower return on such investments. On the bright side, it has created a boom in wireless data plans which didn’t exist before.
Sacconaghi believes that this paradox will eventually lead to usage-based pricing among U.S. carriers. Customers who use more data will pay more, customers who use very little will pay less, instead of the current $30 per month flat rate for everyone. The analyst feels such a move has the potential to put Apple at a disadvantage in the short term, since usage-based pricing could open the doors to cheaper devices aimed at strictly e-mail or 2.5G, low-bandwidth networks.
In Sacconaghi’s opinion, the average iPhone user consumes five to seven times more bandwidth each month than the average wireless voice subscriber, and more than twice as much data as the average 3G smartphone user — ranging from 250 to 350 MB per month including voice, already above the 200-250 MB entry level data plans offered by Verizon and AT&T. Heavy users can consume one to five GB a month, and Sacconaghi feels such users are of little value to carriers.