Why have unlimited data plans disappeared from the market?
Do you remember the good old days of unlimited data? Well let me refresh your memory. Bell actually started the unlimited data “revolution” way back in Q3 2007, around late September, when they introduced a $75 unlimited data plan for PC card or Internet Stick users. This was unprecedented when Bell introduced this plan. Considering that PC card users at the time were paying as high as $12 per MB (that’s over $1200 per GB) to use their air card.
Bell led again in November 2007 with an unlimited data plan for smartphones at only $7. This cell phone data plan was a promotional plan for the HTC Touch. TELUS responded with a $15 unlimited email and web plan in Feb 2008 and made it available to its entire smartphone lineup. Bell later increased their unlimited web plan to $10. The main positioning was to have a smartphone with a killer plan to combat the soon to be released iPhone on Rogers’ network.
Rogers never followed the unlimited game. In fact it first announcement of the iPhone and corresponding plans were met with huge opposition, and an online petition which generated over 60,000 signatures forced Rogers to reconsider these status quo plans. In response, Rogers released the $30 data plan for 6 GB, which for most purposes is an unlimited data plan. This plan was only available at the time with the iPhone on a 3 year term.
So where did these cell phone plans go? Well there were several reasons why these cell phone plans were introduced and later removed. First, it was the start of the smartphone evolution in the consumer space. And these plans made smartphones affordable for a typical consumer. As the smartphone uptake became more common place and as customer adoption accelerated the need to incentivize customers dropped. Secondly, the iPhone was a game changing device and was only available on GSM type networks which excluded Bell and TELUS. To combat this shortfall, these providers were aggressive in offering alternatives to drive Smartphone sales as well as to offer a competitive position to the iPhone. After the iPhone was launched and everyone who wanted one got one, then the need to continue with unlimited data plans wasn’t simply there.
And finally, and probably one of the main reasons for pulling the plug on unlimited data plans was abuse by a few and misunderstanding by many. Unlike voice minutes, where a customer can gauge if they have used their phone for 200 minutes or so, it’s very difficult to gauge data usage. How do you measure 1 MB usage or if you have used 1GB. It’s very difficult to do, so some people took it as a license to do what they would do on their home Internet computers. Download movies, download music, connect their phones to their computers and surf the web, use their aircards as they would at home etc. This caused a lot of problems on carriers’ networks, and frankly they were unprepared for the massive upsurge of traffic and related network problems.
The net result were huge bills to the abusers, who themselves were shocked because they were on “unlimited” data plans. In Dec 2007, an oil field worker from Calgary received a bill for over $50,000 after signing up for Bell’s unlimited web browsing plan. This was just an example of the many exorbitant bills that customers received after not fully understanding the fine print for unlimited.
The carriers responded with an education campaign, and Rogers led the way with system notifications to clients which told them when they were reaching their capacity and allowed customers to trim their usage when it got too high. Bell and TELUS are expected to have these notifications as well, and TELUS is leveraging its recently introduced TELUS Client Learning Centres to help educate clients on data usage. As consumers become more aware of wireless data usage, and as Smartphone usage become more common place, we can expect to see more limited forms of unlimited data usage in the future.