Does the end of unlimited data spell doom for the mobile revolution?

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By Patrick Gray

June 1, 2012, 8:12 AM PDT

Takeaway: Patrick Gray doesn’t think that the end of unlimited data will stifle mobile innovation. Do you agree?

For months, U.S. mobile carriers have been discussing ending their unlimited data plans for phones and tablets. The two largest carriers, AT&T and Verizon Wireless, have already ceased offering unlimited data plans, allowing users who already have such a plan to be grandfathered into keeping their unlimited data. Recently, however, executives at these companies have suggested they’ll seek to end even the grandfathered plans, requiring users to abandon their unlimited plan if they want to upgrade to a new device or faster 4G speeds.
The carriers claim unlimited users place undue strains on their networks, consuming an “unfair” share of data and the associated infrastructure without paying the true cost for what they consume. Consumers argue that carriers are now attempting a “bait and switch,” gradually diminishing the value of a service the carrier contractually agreed to provide. In extreme cases, each side claims that unlimited data could spell doom for the rapid adoption of mobile devices like phones and tablets, with carriers saying their networks can no longer handle the demand placed by unlimited users, and consumers and pundits suggesting that cheap, plentiful mobile data is a cornerstone of rapid tablet adoption. So, which side is right?

The perils of “all you can eat”

While I have no special inside knowledge, for the carriers this is likely a simple financial decision. Like it or not, the major mobile network providers are gradually being reduced to “dumb pipe” status similar to household and office broadband, where the connection to the network is little more than a commodity.
With unlimited data, consumption is no longer a factor in purchasing decisions. Just as a significant number of electric customers would set their AC to near-icebox levels if electricity were free, providing everyone with unlimited data creates no incentive to buy additional products or services from the carrier. Why pay extra for carrier-provided messaging or video calling when you can jam it all down the unlimited dumb pipe?
It’s hard to feel a great deal of sympathy for the mobile carriers, since they effectively created this scenario by offering unlimited data, a mistake that many global carriers have avoided. Now, they are forced to offer customers less for more — or carefully force a switch to a metered plan in exchange for faster network speeds or increased services.

Does the end of unlimited kill the mobile revolution?

Pundits argue that a world where users must carefully monitor and track their data usage will kill innovation in the mobile space, since any new app or service must be carefully considered rather than downloading first and asking questions later. There is some truth to this concern: a user or business might skip a genuinely useful application or service if they feel it’s not worth allocating scarce resources toward it. While this might be a new consideration in terms of data use, it’s not new in terms of time and financial resources, so the end of unlimited data makes these questions more complex but doesn’t necessarily pose an entirely new set of considerations.
In the consumer space, much of the mobile innovation is around social networking, and high-data services (like image and video sharing) will likely be impacted as their user base must more carefully consider its data usage. Carriers have made some noise about allowing these applications themselves to pay for their data use, which seems to be an interesting solution if concerns around so-called “net neutrality” can be worked out, but this seems to be years away at best.
To some extent, banishing the unlimited dumb pipe might spur innovation and higher-quality applications. When you must pay for the bits required for the latest trivial app or viral video, concerns about the quality of what you’re downloading suddenly enter the equation.

The doom and gloom is overrated

If one takes the carrier “party line” that unlimited is degrading and straining their networks at face value, surely some change is necessary. I struggle to rally much sympathy, since the carriers made a business decision that appears to be shortsighted, but I don’t see the end of unlimited data stifling mobile innovation. With 4G networks rallying around common standards, and the carriers themselves increasingly becoming a commodity, we’re far more likely to see innovation in the mobile space rather than a world where every user spends minutes pondering each tap and download.