Mobile growth driving out unlimited data

Sprint and other carriers use caps to rein in use, but they may remove them later

All-you-can-eat data ran up against booming demand this week as Sprint Nextel became the last big U.S. carrier to end unlimited mobile broadband plans. But those unlimited plans may come back -- some day.

On Thursday, Sprint notified subscribers that its unlimited data plans for all devices except phones would be discontinued. On other devices, such as tablets, netbooks and mobile hotspots, the use of Sprint's 4G network will be capped, as use of the carrier's 3G network already was. Verizon Wireless, AT&T and T-Mobile USA have already capped their mobile broadband plans.

It was inevitable that unlimited data would fall by the wayside as the popularity of mobile data exploded over the past few years, industry analysts said on Friday.

"Unlimited data plans are unsustainable. There just isn't enough bandwidth available," said analyst Jack Gold of J. Gold Associates. Sprint may have held out longer than other carriers because it hasn't seen the kind of subscriber growth that has happened at AT&T and Verizon over the past few years, Gold said.

Sprint also benefited from having the nation's first 4G infrastructure, the WiMax network launched in 2008 and built out by Clearwire, which is majority-owned by Sprint. Both WiMax and LTE (Long-Term Evolution) 4G networks handle data more efficiently than 3G networks. While it was still selling unlimited 4G data, Sprint boasted that the high capacity of that network allowed it to offer that feature. But it may have started to push that capacity.

"Any wireless network has limits," Gold said.

The availability of unlimited plans may have had more to do with the early stage of mobile data services than with a brave new world of subscribers being able to use as much data as they pleased, said Roger Entner of Recon Analytics. In 2007, when the first iPhone was launched and AT&T offered unlimited data on it, average consumers didn't yet know what they would do with it.

"It was the lure to get people to use it and to like it," Entner said. "And people are loving it."

Several measures show mobile data booming. IDC said 305 million smartphones were shipped worldwide in 2010, and the company has forecast that number will grow 55 percent to 472 million this year. A survey by Credit Suisse earlier this year said mobile networks around the world were running at an average of 65 percent of capacity, a level at which carriers typically start building more capacity, and would reach 70 percent within 12 months.

Sprint's 4G network, operated by Clearwire, is no exception. Powered largely by subscribers who reach the network through Sprint, Clearwire's user base is expected to grow by 1.9 million in the third quarter, up 29 percent from the previous quarter, and reach 9.5 million by year's end, Clearwire said last week.

That growth, along with the sudden emergence of new types of mobile devices, is largely what has caused carriers to rein in their customers' use of mobile broadband, Entner said. The data demands of mobile applications, and the devices that make those applications possible, make unlimited plans too unpredictable, he said.

"Nobody knows, right now, what is the normal data consumption of a person in five years," Entner said. But over time, the mass of consumers will settle on a few types of devices and applications and it will be easier to predict the amount of data an average subscriber will use in a month, he said. Carriers will feel more confident removing caps.

"In three to five years, unlimited plans will come back," Entner predicted.

In the meantime, there was good news for consumers using WiMax service directly from Clearwire.

"Clearwire believes in the value and simplicity that our unlimited plans offer to customers, and we believe our customers do, too. We are committed to continuing to offer unlimited options and do not expect this to change," Clearwire said in a prepared statement.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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