How AT&T's Data Limits Affect You

Make no mistake, the data limits AT&T set on smartphone and iPad users on Wednesday are a big deal.

In fact, they could be a huge deal. The new data pricing plans, which take effect on Monday, affect new wireless subscribers and, arguably, all the wireless carriers that compete against AT&T as well as their subscribers.

The announcement even affects the multitude of Internet content providers, including advertisers, which will be forced to re-think whether they are shipping too much superfluous content that data-restricted users might never click on out of fear of exceeding their monthly data limits.

At the grandest level, AT&T's plan to stop offering $30 unlimited data plans to new subscribers could be compared to a warlord arriving in a savage land and laying down basic rules for sharing a limited, vital resource -- something as basic as water or available hunting grounds.

Suddenly, some users will be wondering if the 2GB data cap at $25 a month under the new AT&T plan means they shouldn't use the video chat expected in the next-generation iPhone being announced Monday, play an online game or try a content-rich enterprise application, fearing they could be subject to an overage charge.

The AT&T plan also gives users a choice of 200MB of data for $15 a month, or 2GB for $25 a month. For exceeding the 200 MB limit in the DataPlus plan, an added $15 will be charged for another 200 MB. For exceeding the 2GB limit in the DataPro plan, users would pay $10 a month for every 1GB they use over 2GB. "AT&T is basically saying that data access was never free, but now it is saying access is not unlimited either," said Kevin Burden, an analyst at ABI Research, in an interview.

To sort through some of the impact of AT&T's announcement, here are some questions and reflections:

Will All the Major U.S. Carriers Follow AT&T's Lead?

Verizon Wireless almost certainly will, and Sprint Nextel and T-Mobile USA probably won't. Even so, all the carriers have discussed the issue of capping data use for years, even as they have tried to find ways to add more wireless spectrum for surging data demands from smartphones, such as the iPhone, as well as netbooks and tablets, including Apple's iPad.

Verizon, the nation's largest wireless carrier, said it won't comment on No. 2 carrier AT&T's move or its future plans. However, several analysts said they believe Verizon will set data caps by the time its new LTE network begins to emerge later this year.

"Verizon will follow AT&T pretty quickly," said Jack Gold, an analyst at J. Gold Associates. "My bet is six months. They will see similar bandwidth congestion [that AT&T has experienced with the iPhone and other smartphones] with all the Droid phones they are shipping and the move to an array of tablets and netbooks that get 3G." Phillip Redman, an analyst at Gartner Inc., and Burden agreed on Verizon's potential move to data caps.

Most of the analysts interviewed said Sprint Nextel, the third-largest wireless carrier, will not move to data caps soon, and may not for a long time. "Sprint doesn't have the capacity constraints of either AT&T or Verizon, since they have been losing customers and not saturating their networks," Gold said.

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