T-Mobile USA Data Price Increases – Bandwidth Issue or Greed?

T-Mobile LogoAre US GSM/HSDPA carriers running out of bandwidth?  It sure looks like it.  First AT&T killed the “unlimited” data package for GoPhone pay as you go users, then they took away the option to sign up for unlimited data for users on GoPhone hybrid prepaid plans.  Now T-Mobile has raised data prices across the board for postpaid and hybrid users. Data has never been offered on T-Mobile pre-paid

AT&T’s actions will decrease revenue so I can’t see any reason they did other than to cut data usage. The 3G data issues that iPhone users have been reporting appear to be caused by  AT&T’s 3G network rather than any issues with the phone, according to both lab tests and an analysis of iPhone performance around the world. In my own use of the N95-3 on AT&T in San Francisco, I see frequent hangs and have never achieved a data rate much over 300 kbps, far less than the 2000 kbps HSDPA should be capable of.

In the case of T-Mobile, raising prices in the middle of a recession seems like a sure way to drive away customers or at least discourage them from adding a data package. So what do T-Mobile’s new prices look like?  For the details, TmoNews seems to have the best breakdown. Here’s a summary comparison:

Old Plan Old Price ($/mo) New Plan New Price
T-Mobile Web – Unlimited MB (Proxied) 5.99 50 MB data (Not Proxied) + 200 messages 9.99
Total Internet – Unlimited MB + unlimited use of T-Mobile WiFi hotspots 19.99 Unlimited  data and hotspots + 400 messages 24.95
BlackBerry (BIS) – Unlimited data and mail + unlimited use of T-Mobile WiFi Hotspots 19.99 Unlimited  data and mail + 400 Messages (hotspots 9.99 extra) 24.95
Sidekick – Unlimited data + unlimited messages 19.99 Unlimited data + 400 Messages (unlimited messages $10 extra) 24.95

In addition to raising the prices, T-Mobile will no longer allow the cheapest $9.99 plan to be used with Windows Mobile phones or anything else that the carrier defines as a “Smartphone” which apparently includes the new Samsung Behold. The Behold is a touchscreen device that superficially resembles an iPhone but is really just a typical T-Mobile feature phone with locked down Java that keeps it from running 3rd party data-aware applications.

As I said at the beginning, I think these new rates are designed to curb data consumption rather than to increase revenue.  T-Mobile does not require a data plan even with smartphones or the G1.  These prices will discourage a certain percentage of users from adding data.  The 50MB cap is another indication that discouraging data use is the intention.  Overages on the 9.99 plan are charged at $0.20/MB with a cap of $15.00 on top of the 9.99 for a maximum monthly charge of 24.99.  That will certainly make many users think twice before streaming video or audio.

Users on the old plans will be grandfathered as long as they don’t change plans or upgrade from a feature phone to a smartphone, Blackerry or Sidekick.

T-Mobile used to have a reputation for the lowest voice and data rates among the major US carriers. That’s no longer as true as it used to be as the following table shows.  It lists the cheapest available voice only plan for feature phones and the cheapest voice + unlimited data plan combination for smartphone’s and BlackBerries.  These prices are for the San Francisco Bay area and may not apply everywhere.  The various carriers also offer different amounts of voice minutes with their plans, ranging from 200 (Sprint feature phones)  to 450 (Verzion, ATT and smartphones on Sprint).  T-Mobile falls in the middle with 300.

Carrier Voice Only Feature Phone Voice + Unlimited Data Smartphone Voice + Unlimited Data BlackBerry Voice +Unlimited Mail/Data
Verizon 39.95 54.95 69.94 69.99
Sprint 29.99 44.99 69.99 69.99
AT&T 39.99 54.99 69.99 69.99
T-Mobile 29.99 54.98 54.98 54.98

T-Mobile still has an advantage for smartphone users.  Or maybe not, compared with the other carriers T-Mobile gives you fewer voice minutes and has far less 3G coverage so it’s not the bargain it appears to be.

In defense of the carriers, I don’t think they are doing this out of greed.  Data use is exploding and with it the myth of unlimited 3G data is dying. In many urban areas, all the available channels are already in use so adding more capacity isn’t possible.  AT&T is already doing doing data shaping, giving users with iPhones highest priority, followed by postpaid users and finally prepaid.  T-Mobile is also data shaping, but taking a different approach, anyone exceeding 10GB of data in a month will have their data rate reduced to about 50 kbps for the rest of the month.

Making data more expensive and limiting it to postpaid users is certainly going to have a negative impact on adoption of mobile web services by users. If there is in fact a bandwidth shortage, I don’t know what can be done to ease it. Interestingly, the CDMA/EVDO carriers, Sprint and Verizon, don’t seem to be doing anything to curb data usage.  Is EVDO significantly more spectrum efficent than HSDPA? How about 4G including WiMax and LTE?  Any readers who are knowledgible about wireless data network technologies care to jump in with a comment?

5 thoughts on “T-Mobile USA Data Price Increases – Bandwidth Issue or Greed?

  1. Oh, and 4G/LTE isn’t coming for a while.
    Verizon plans on using LTE, however they may have to do a similar “tack on completely new hardware” route for LTE as AT&T/T-Mobile is doing for HSDPA.

    However, realistically, EVDO service is pretty darn good already for people on the go. So I doubt people will complain all that much that they can’t get more data than their phone’s CPU can handle. So, I wouldn’t hold your breath for LTE.

  2. Regarding EVDO versus HSDPA:

    EVDO service in the US right now will most definitely be better. It’s not that it’s more efficient. (I’m not sure if one or the other is more efficient) The reason why EVDO will be better is simply because of the number of towers available for EVDO service.

    HSDPA deployment by t-Mobile and AT&T is simply behind because they have to strap on completely new equipment to each tower.

    EVDO deployment by Sprint and Verizon was practically a software upgrade for all their existing IS-95(CDMA2000) towers, so that’s why they’ve had solid 3G service for the last 4 years.

    Eventually AT&T and t-Mobile will catch up, but my guess is that it’ll take another 3-5 years.

  3. This is an interesting topic. Not just T-Mobile, but many, if not all carriers are struggling with these unlimited models, whether voice or data. Typically it’s affordable for them, however, there are always some abusers that render these program unprofitable. That’s why you’ve seen reasonable usage clauses sprouting out. Only time will tell…


  4. This just sucks as I found out a few minutes ago when calling T-Mobile. I bought an iPhone, unlocked it. For the sole purpose of being able to have a data plan that was affordable. Sigh…

  5. Please tell me how to resolve the error which occurs while restoring a backup on n 95 4 . When i was restoring it gave an error at 88 or 89% usually.

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