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commentary Once Sprint Nextel gets the iPhone, you can bid farewell to its unlimited-data plan.
CBS/Sprint
If history is any indication, Sprint will have to make some tough decisions, if Apple’s blockbuster device starts weighing on its network. It’s something the other carriers have done, and it’s part of a broader trend of telecommunication companies struggling to keep up with growing bandwidth consumption.
After suffering through years of heavy bandwidth usage from iPhone users, AT&T relented and switched to a tiered pricing plan last year. It only took Verizon Wireless a few months after launching its version of the iPhone 4 before it opted to apply similar data caps.
Sprint, which The Wall Street Journal reported today will be getting the iPhone 5 at the same time as AT&T and Verizon in October, will likely follow the same path.
I have no first-hand knowledge of Sprint’s thinking on its successful–but taxing–offer of an all-you-can-eat data plan for its smartphones. A Sprint representative wasn’t immediately available to answer my questions.
But I do know that networks aren’t fundamentally different from each other, despite the marketing jargon and hype that surrounds them. Sprint doesn’t have any more capacity than Verizon and AT&T. In fact, it may be in a worse position now because its unlimited-data offer is unique in the market, likely attracting the heaviest of users.
The carriers’ switch to tiered plans doesn’t include existing unlimited-data customers, who have had the option to be grandfathered into an unlimited plan. You can see the strain the grandfathering is putting on the carriers, with both AT&T and Verizon switching to language in their service agreements that allow them to throttle, or choke off, the connection speed when a user exceeds a certain threshold of data consumption.
Sprint is in a touchy spot because it has positioned itself as the unlimited carrier. Ads talk about the company’s truly limitless plans, and Chief Executive Dan Hesse has been featured on commercials deriding competitors’ actions such as throttling.
As I’ve written, Verizon’s decision to switch to a capped plan has been a boon for Sprint. The carrier is the only remaining company to offer a truly unlimited-data plan, a rare marketing and competitive edge outside of cheaper prices. Even Sprint’s prepaid arm, Virgin Mobile, has decided to employ throttling.
But all good things have to come to an end. Speaking to a roundtable of bloggers and reporters last month, Hesse acknowledged that data traffic could eventually be an issue.
“Nothing’s a guarantee that it’s forever,” he said at the time.
For Sprint, the choice is a trade-off: keep the unlimited-data plan and spur additional customer growth, or cut back on the plans and ease the need to invest in more capital for the network. Its decision may indicate whether it is favoring the consumer or Wall Street.
When I wrote about Sprint eventually dropping the unlimited-data plan, analysts gave it a year to 18 months before a change would happen. But with the iPhone becoming available to Sprint customers, that timetable could be accelerated. Thanks to its more affordable data plans, Sprint has a higher base of smartphone customers than its rivals–roughly half of its total customers.
While it has gotten used to dealing with the bandwidth-intensive Android phone, Sprint may be in for another pounding, once more customers start upgrading their basic phones for the iPhone.
And even if the iPhone isn’t significantly more data-hungry than its Android counterparts, Sprint may use the iPhone’s reputation as an excuse to close off the unlimited-data spigot.
So what does that mean for customers? If the iPhone does come out for Sprint, hop on an unlimited-data plan while you can (and thus get grandfathered in). The plan may not be around much longer.
