Wednesday, June 2, 2010

AT&T Metered Plan Good for RIM, Clearwire

In a somewhat stunning about-face from the recently implemented unlimited data plan for the iPad, AT&T announced the effective end to unlimited data. Gone are the days when you could stream Netflix to your cellular device such as Apple's iPhone or iPad 3G for a fixed monthly fee -- at least on the AT&T network.

You see, this pricing action by AT&T will now serve to highlight Clearwire's superior spectrum position, which enables it to offer unlimited data service for $60 a month when using the Sierra Wireless Overdrive "mobile WiFi hotspot" and $30 when using the equivalent functionality on the HTC EVO 4G, which launches in Sprint stores on Friday.

You want your iPhone or iPad with unlimited data? Just pair the iPhone iPad or iPod Touch, with either the Sierra Wireless Overdrive or the HTC EVO 4G, and you're covered. Not only do you have a plan that was better than the new expensive metered AT&T data plans, but your plan remains even better than AT&T's old plan, because there is no 5 GB cap per month.

This is the result of Clearwire's superior spectrum position, which means it has the capacity to offer users more data consumption without hitting the ceiling in terms of capacity. Think of Clearwire as offering a freeway with 10 lanes in each direction, compared with one lane in each direction offered by AT&T. There is just no remote comparison.

Eventually, of course, Clearwire and its 57% majority owner Sprint also will be forced into some form of a metered data plan, but this could take a year or two or more. It just takes a lot longer to fill up a 10-lane freeway than a one-lane freeway. In the meantime, this is a huge gift to the Sprint and Clearwire marketing departments.

The other main beneficiary of this AT&T pricing action is BlackBerry maker Research in Motion, whose devices use complex compression techniques to reduce the amount of data going across the network. Claims vary, but generally it is thought that a BlackBerry consumes three to five times less data to accomplish many tasks, compared with a device such as iPhone or Google's Android.

Practically, this means that a BlackBerry often consumes only 100 to 200 MB or so per month on average, whereas an iPhone or Android may consume around 500 MB to 1 GB per month. These are average numbers I have heard from many people in the cellular operator industry over the last six or so months. To the extent that the consumer understands this, including education by the carrier, this will be a huge boon to the sales of BlackBerry from the perspective of people paying less for data, compared with iPhone and Android.

No longer will everyone pay $30 a month. A BlackBerry user could pay less and not face overages, whereas other smartphone users may end up paying overages. Certainly many smartphone users consume more than 2 GB per month and almost none of those are BlackBerry users.

This AT&T pricing action also plays into what AT&T's chief consumer boss, Ralph De La Vega, said during his presentation at the CTIA trade show in March, when he talked about a new smartphone browser consuming some 2.5 times less data than current smartphones. It seems that what he was talking about was the new upcoming WebKit browser from BlackBerry, which could be unveiled as early as this month and be in stores no later than September.