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AT&T is reportedly preparing to shackle its smart phones with throttling, just in time for the launch of the latest iPhone in September.  (Source: The Huffington Post)
Nation's second most expensive network gets another limitation, which offers a mix of perks, downsides

Verizon Wireless (VZ) and AT&T, Inc. (T), the U.S.'s two largest cellular service providers, are also the nation's two most expensive providers in terms of data plans.  Unlike Sprint Nextel Corp. (S), their more expensive plans don't include an all-you-can-eat data buffet.  And unlike Deutsche Telekom AG's (ETR:DTE) T-Mobile USA, they will punish you for overages rather than simply throttling (slowing) your connection once you exceed your allowance.

However, Verizon and AT&T have decided they're going to unload yet another limitation on their plans -- throttling for "greedy" data users.  Under an official plan [PDF] from Verizon and a rumored plan from AT&T, the networks will likely slow your connection once you hit a certain limit in your usage.

The great unknowns are what that limit is in MB or GB, and how slow the connection will be post-throttling vs. pre-throttling.

According to sources quoted by 9 to 5 Mac, the limit may be at around 12,000 emails, 12,000 website views, 4 streaming movies, and 5 hours of streaming music.  The former items seem quite generous, but the latter indicate that customers may definitely bump into the data limit.

Verizon has insisted that its implementation will only affect the top 5 percent of data users, who use roughly 30 percent of the network's data bandwidth.

Throttling is a tried and true communications industry principal, pioneered by companies like Comcast Corp. (CMCSA).  While it's a policy that many customers despise, it can deliver bigger profits to the service provider, or relieve stress on overtaxed networks.  The latter benefit is particularly important in the mobile realm, as the major carriers are struggling to build enough towers to keep up with customers' data bandwidth demands.  Since 2007, AT&T has reported an 80 fold increase in data consumption by its customers.

Ultimately the benefits of the planned throttling may include a higher average data speed for standard users under the threshold, and lower overages for customers over the threshold.  

Disadvantages include that customers could get even less return on the already exorbitant plans, should the throttling threshold be set too low.  Further, the move essentially neglects the small percentage of customers who would be willing to pay reasonable overage rates or a larger monthly fee for an "unlimited" data allowance.

The new plans reportedly will roll out around September -- just in time for the launch of the new iPhone.  IPhone users traditionally have been some of the heaviest consumers of data, so this timing is likely not coincidental.

Updated 7/27/2011 @ 7:30 pm

AT&T has officially announced its throttling plans which will target the top 5% downloaders who have unlimited data plans. Here's a clip from the press release:

One new measure is a step that may reduce the data throughput speed experienced by a very small minority of smartphone customers who are on unlimited plans – those whose extraordinary level of data usage puts them in the top 5 percent of our heaviest data users in a billing period.  In fact, these customers on average use 12 times more data than the average of all other smartphone data customers.  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.

Starting October 1, smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5 percent of heaviest data users.  These customers can still use unlimited data and their speeds will be restored with the start of the next billing cycle.  Before you are affected, we will provide multiple notices, including a grace period.

This change will never impact the vast majority of our customers, and is designed to create a better service experience for all. 

The amount of data usage of our top 5 percent of heaviest users varies from month to month, based on the usage of others and the ever-increasing demand for mobile broadband services.  To rank among the top 5 percent, you have to use an extraordinary amount of data in a single billing period.


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Metered payment?
By Belegost on 7/29/2011 2:14:18 PM , Rating: -1
What the hell is wrong with a simple $/MB model? At say .02$/MB I would pay an average of $20/month (around 1GB of transfer.) Users who are hitting these 5GB caps would owe $100, which would fairly charge them for their extra use of the limited tower capacity.

The only thing I can think of is greed. I get screwed every month paying $60 for two 5GB limits when I have never gone over 2GB of usage in a month. Considering that only 5% of the users seem to exceed these limits, I would estimate that the average user is close my own 1GB/phone usage. This means these companies are raking in lots of money for unused bandwidth, while simultaneously punitively charging and limiting the users that try to fully take advantage of the service.

RE: Metered payment?
By bigdawg1988 on 7/29/2011 2:31:03 PM , Rating: 5
The only thing I can think of is greed.

Congratulations! You're now eligible to be a phone company executive.

RE: Metered payment?
By Jeffk464 on 7/30/2011 8:08:45 AM , Rating: 2
Anandtech you missed a story on digital recording of police officers. The Fullerton CA police department beat an unarmed man to death and then tried to cover it up. They were successful until pictures of the man and video of the beating were released to the media. I understand that the incident is currently being investigate by the FBI.

RE: Metered payment?
By Jeffk464 on 7/30/2011 8:11:40 AM , Rating: 2
P.S. like Semi Valley in the Rodney King case, Fullertan is extremely conservative and tends to defend cops no matter what. This story should be of great interest to you, based on previous stories you have posted.

RE: Metered payment?
By Kyuu on 7/29/2011 3:23:11 PM , Rating: 3
This means these companies are raking in lots of money for unused bandwidth, while simultaneously punitively charging and limiting the users that try to fully take advantage of the service.
Congrats, you have successfully deduced the Telco's business model. Of course, this is exactly why these capped Internet/data services are such a bunch of crap.

RE: Metered payment?
By christojojo on 7/30/2011 2:48:14 PM , Rating: 3
Yet people buy the smart phones and complain and buy more and complain. Just sheep to slaughter knowing their doom and yet still passively allowing it.

Seriously, I bought a cellphone and a Itouch for the PDA. No bandwidth problems no overages just a phone and a PDA.
My penalty is I carry too small devices not one. Boo hoo me.

RE: Metered payment?
By Assimilator87 on 7/29/2011 9:43:45 PM , Rating: 1
I'm not a heavy user by any means. All I do is use internet radio and browse the web and I still come out over 2GB/month. I don't think you realize how easy it is to reach these seemingly outrageous numbers just from normal everyday usage. For someone who's actually fully utilizing their mobile device i.e. Netflix, these caps are rediculously low. Data usage is naturally moving higher, while the cellular companies are lowering caps instead of getting with the times.

RE: Metered payment?
By DennonHeim on 7/30/2011 1:46:06 AM , Rating: 2
"At say .02$/MB I would pay an average of $20/month (around 1GB of transfer.) Users who are hitting these 5GB caps would owe $100, which would fairly charge them for their extra use of the limited tower capacity."

You are advocating such a model, but you accuse AT&T of greed? Right now, AT&T is charging $25/2GB and (as you say) $60/5GB of data. In other words, they would absolutely *love* the idea of charging consumers $0.02 per MB as that would be double what they're currently charging.

And why not? $0.02/MB is insanely expensive for bandwidth -- roughly 100x more expensive than what standard ISPs are charging.

Don't believe the propaganda AT&T is spouting. They recently admitted that their revenue is higher than ever and they thanked mobile data for it!

RE: Metered payment?
By ezinner on 7/30/2011 12:10:44 PM , Rating: 2
I see how a pay per megabyte model would benefit most users if they had a system that showed you your usage in real time. I on the other hand, love unlimited plans. I don't want to think about how much a streaming movie is costing me or the cost of reading this website. I pay for peace of mind. Having said that, why not give us the choice of both unlimited and PPM. What I can't stand are the carriers changing their tune and removing features while raising hte prices, i.e. text messaging not being considered data. They see one carrier doing it and they also jump on board.

RE: Metered payment?
By Dr of crap on 8/1/2011 12:58:33 PM , Rating: 2
Yes, it SEEMS easy.
THEY will never do it!

RE: Metered payment?
By FITCamaro on 7/30/2011 1:23:50 PM , Rating: 2
With 4G service offering faster speeds at cheaper prices for providers, I think a $5 per GB model would be fair.

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