AT&T Data Caps Spell Doom

AT&T on Wednesday ended the all-you-can-eat data buffet for iPhone users by announcing new wireless data plans with monthly data limits. Web companies will suffer as a result.The plans provide 200 megabytes (MB) of data and 2 gigabytes (GB) of data for $15 and $25 per month respectively. That sounds pretty good, given that 98% of AT&T customers use less than 2 GB per month.

But without flat rate bandwidth, every online action invites mental calculation about the worth of the activity. And it will turn out that a lot of online activity just isn't worth paying for. Even if the cost is trivial, metered usage will create mental drag that's likely to discourage Web use on AT&T mobile devices.

This is one of the reasons that micro-transactions have proven to be so problematic. It's too difficult to determine whether, say, a news article is worth a ten cent reading charge, so those invited to make that calculation tend to balk rather than pay. The cost-benefit analysis we all go through when we are asked to pay for something just becomes too murky.

This is doubly true for ads. Users will be paying for the bandwidth to deliver marketers' pitches.

When the ads come as part of a flat rate package, that's not a problem. But when every electronic bit counts toward one's data limit, people are going to start demanding refunds for ad bandwidth, or ad blocking software.

That may be just what AT&T wants: It could charge advertisers a premium to deliver ads that don't count toward viewers' data totals.

Two GB is enough, AT&T says "to send/receive 10,000 emails (no attachments), plus send/receive 1,500 emails with attachments, plus view 4,000 Web pages, plus post 500 photos to social media sites, plus watch 200 minutes of streaming video."

iPhone user consume an average of 273 MBs of data per month, according to Consumer Reports.

View a few movies using your phone and you've hit your monthly limit. Suddenly, innovative services that involve streaming video and music, video chat, VoIP calling, and other data-heavy activities like live streaming look a lot more difficult on mobile devices.

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