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AT&T Says Goodbye to Unlimited Data With ‘Throttling’

The next time you think about downloading a movie on your smartphone, you might be better off waiting until you have Wi-Fi at home — or at Starbucks.

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AT&T announced on Friday that from Oct. 1 it will reduce data speed of customers who download the highest amount of data on their cell phones when they stream movies and download music – a process that consumers and analysts call “throttling.” The decision is the latest sign that the era of unlimited data use is over as companies continue to pull back on unlimited data plans. Analysts say it will affect more than just the top 5% of its heaviest data users, as AT&T suggests. “This step will not apply to our 15 million smartphone customers on a tiered data plan or the vast majority of smartphone customers who still have unlimited data plans,” AT&T says.

But others say there’s a bigger picture. Scott Sutherland, analyst for Wedbush Securities, says companies are training customers to use their phones wisely. “This is about a finite resource like electricity or water.  You cannot have an economic model where there’s a scarce resource and people use it as much as they want.” Craig Moffett, senior analyst with Bernstein Research, says no-one will be exempt — even AT&T’s “grandfather” customers who had unlimited data plans during the years when “unlimited” had no restrictions. “This is extending a policy to the grandfathered customers. For everybody else, they’re paying on a metered basis. The grandfathering period is over.”

The story so far: AT&T, T-Mobile and Verizon Wireless have all introduced the right to “throttle” customers. Sprint claims to a hold-out. “Sprint is now the only national wireless carrier to offer truly unlimited data for phones – with no overages or throttling,” says Emmy Anderson, a Sprint spokeswoman. However, Sprint recently said that its pre-paid customers on Virgin Mobile will also be subject to throttling after they use 2.5 gigabytes of data in one month in its own throttle test. Sprint has a more fragile customer base, Moffett says, so it must tread carefully before it follows the other carriers on throttling. “Rationing is an ugly word,” Moffett says, “but that’s what it is.”

Will you think twice before using Netflix on your Smartphone?

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    • That sure is a whole bunch of entitlement from some plpeoe. Maybe plpeoe have lost perspective, or maybe I’m just getting old relative to others, but I remember a time when I waited weeks if not months for an episode of a series to come out. A series just getting dropped (or even the whole group vanishing) partway through wasn’t uncommon. A series not getting subbed at all was even more common.And now plpeoe whine because they might have to settle for a professionally translated version shortly after it airs in Japan. My condolences.( Get off my lawn, etc.)

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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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