Unlimited data isn't as unlimited as it used to be.
AT&T (T) advised wireless customers on unlimited data plans over the weekend that it plans to begin slowing down its most active smartphone owners.
Come October, customers among the top 5% of AT&T's data users in any given billing period will be subjected to reduced access speeds. Multiple notices will go out and an initial grace period will be observed, but their access will inevitably be slowed until the end of the billing cycle, when the entire process will play itself out again.
It's Data Hog Hunting Season
AT&T isn't breaking new ground here. Rival Verizon (VZ) initiated a similar policy earlier this year, just as it was introducing Apple's (AAPL) iconic iPhone. "Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95% of data customers aren't negatively affected by the inordinate data consumption of just a few users," Verizon said at the time.
It may seem fair on the surface. Why should the needs of a few data hogs bog down the surfing experiences of the many? Verizon had also seen AT&T's network overcome by Web-happy iPhone users, and the last thing it wanted was to become the ironic subject of its own attack ads.R
However, there is something wrong about having to tack on an asterisk to an unlimited plan.
Where's the Uproar?
If a buffet operator cut off 5% of its heartiest eaters from making another run at the carving station, there would be a groundswell of criticism. If an amusement park manager made 5% of its most active riders stand in longer lines, it wouldn't sit well, not just among coaster enthusiasts.
Why aren't more people complaining about the throttling that is taking place at the country's two largest wireless carriers?
The obvious rebuttal is that consumers do have choices, at least after their two-year cellular contracts are up, if they don't want to deal with stiff early termination fees. We can let the free market decide. If these moves send more customers to Sprint (S) or smaller carriers, AT&T and Verizon will have to change their data-shackling ways.
However, it's not as if there's a plethora of options for smartphone owners outside of AT&T and Verizon. There actually aren't any right now when it comes to the iPhone. AT&T is also in the process of acquiring T-Mobile, if regulators don't flinch.
It gets worse.
New AT&T wireless customers over the past year don't even have the option to go with the freshly diluted plan that was just announced. AT&T stopped offering unlimited data to first-time smartphone buyers last summer. This new policy basically applies to older AT&T wireless accounts that have been grandfathered into the original offerings. As long as they stick with AT&T they can continue to upgrade their phones with the now-restrictive unlimited data plan.
Watch Out Cable Customers -- You're Next
It's not just wireless carriers that are moving toward tiered data plans with caps in lieu of simply beefing up their networks to handle the uptick in traffic.
Internet and cable providers are also wheeling into the weigh stations.
Comcast (CMCSA) -- the country's largest cable company -- began experimenting with usage caps on its popular broadband access service three years ago. Smaller players have followed suit.
Even AT&T has moved to cap the same "unlimited" wired and Wi-Fi connectivity that it was telling smartphone users to rely on so they wouldn't have to be on its mobile meter. It decided earlier this year to top out its originally unlimited DSL data plans at 150 gigabytes of monthly usage. Its U-Verse broadband television customers get maxed out at 250 gigabytes a month.
The ceilings may seem high, but have you checked your consumption habits lately? More media and dot-com giants continue to crank out compelling streamed content. More home theater devices make the video streaming process seamless. Pandora (P) and other music-discovery sites are making it more popular to stream music through mobile devices.
You may not be a data hog now, but you may want to feel for the beginnings of a pig tail in a year or two.
You'll be missed, unlimited data plans. The Internet revolution won't be the same without you.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and AT&T.
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