By Quentin Fottrell
Apple didn’t change the price of its iPhones with the latest upgrade, but analysts say owning one is about to get a lot more expensive.
The combination of a bigger screen, access to higher-speed LTE networks and the ability to use the FaceTime video chat app on a cellular connection mean the iPhone 5 – which goes on sale Friday — will likely gorge on more data than its predecessors.
The phone’s most notable new feature — the larger screen — is expected to entice more users to stream movies and TV shows. Streaming site Netflix this week updated its iPhone app to capitalize on the anticipated surge in viewing, and promises special upgrades for the iPhone 5. “Video is incredibly bandwidth greedy,” says Eddie Hold, technology analyst with market researcher NPD Group.
Given the phone’s higher-gigabyte diet, many customers may choose to switch to bigger, more expensive data plans or risk paying monthly overages for excess usage. For instance, customers expecting to stream video on an AT&T iPhone might want to pay $10 a month more to increase their monthly data budget from 300 megabytes to three gigabytes. Streaming video on Verizon’s high-speed LTE network, for instance, eats up 100 to 200 megabytes in just 10 minutes, according to a recent report by PC World. So, a single two-hour movie could max out a five-gigabyte monthly plan. The average 15- to 34-year-old uses three gigabytes of data per month on Wi-Fi and cellular networks, according to research by NPD.
The iPhone 5 launch comes as most carriers are abandoning the option to pay for unlimited data. In June, for example, Verizon offered a new data plan to cover 10 devices under one wireless contract for $50 a month. Other carriers offer similar deals. Running over these limits can cost $10 per gigabyte on AT&T and Verizon, excluding taxes.
Netlix says data consumption by its app varies because the video quality is adjusted depending on the speed of the connection. But in general, the higher-definition screen on the iPhone 5 will demand more data. The app itself will now offer a much larger selection, according to Chris Jaffe, director of product innovation at Netflix.
FaceTime may be an even bigger data drain. Users with a 250-megabyte plan could max out their monthly data allotment in 90 minutes using FaceTime, Apple’s video-chat app, according to a recent report from Frost & Sullivan. (Apple and Netflix did not respond to requests for comment).
Video-streaming apps also risk clogging already congested networks, analysts say, and high-speed 4G networks may not be enough to prevent a slowdown in cellular traffic. “It’s going to be tough for carriers to manage customer expectations,” says Kirk Parsons, senior director of wireless services at J.D. Power and Associates. “If carriers start restricting use for these apps, there will be a backlash.”
Already, AT&T is under fire from public interest groups for limiting the use of FaceTime over the network, according to a report this week in The Wall Street Journal. Customers with older iPhones and unlimited plans may only use FaceTime on a Wi-Fi network — not on AT&T’s wireless network. (AT&T declined to comment.) FaceTime is not limited on Verizon Wireless, according to a spokeswoman.