Which would you rather have happen when you exhaust the data you’ve paid for on your smartphone: a hefty overage charge, having no data at all, or getting your downloads cranked all the way down to 2G sluggishness?
A few years ago, you could only choose between the first two options. But now that the new price plans Verizon Wireless introduced Wednesday include a “Safety Mode” option that gives you unlimited slow-speed data — following similar moves at Sprint and T-Mobile — we all may be looking at door No. 3 more often.
Everybody is over overages
T-Mobile (TMUS) users have had this option for the longest time. That carrier ended overages in April of 2014 in favor of shunting maxed-out users to the slow lane of 2G speeds — at most, 128 kilobits per second.
At the time, T-Mobile CEO John Legere set up a Change.org petition challenging the other three carriers to abolish their own overage fees. That seemed like quite the silly publicity stunt, except that Sprint (S) dumped overages in exchange for slowed access in October of 2015.
And now Verizon (VZ) has done the same thing, sort of. Safety Mode doesn’t replace overages — you can still pay $15 for an extra gigabyte of data — and it costs $5 a month extra on VzW’s 2, 4 and 8 GB plans. You can also opt out of it if the thought of 2G data is too traumatizing.
But why on earth would you want to use an internet speed that’s one hundredth of a good LTE connection? Because 2G, as antique and slow as it may be, suffices for a lot of routine online tasks: getting your e-mail, looking up directions, checking the weather forecast, and griping about your slow access on Twitter or Facebook.
I’ve seen this firsthand when traveling overseas and using T-Mobile’s free 2G international roaming. I’ve also (sorry, T-Mo PR!) seen it in some rural areas where my phone could only get 2G service. If 2G was somewhat tolerable for pioneering iPhone users in 2007, it can still be a good fallback option nine years later.
Data too cheap to meter?
Will AT&T (T) join its three rivals — and many prepaid services and wireless resellers — in swapping out overage fees for slowed access?
One industry analyst I talked to was positive it would.
“It’s almost inevitable that AT&T will follow suit,” said Roger Entner, founder of Recon Analytics. “The pressure of being the only one is just too high.”
Another expert wanted to hedge his bets. “It doesn’t feel like an AT&T thing to do, but I’d have said the same thing about Verizon too,” e-mailed Jan Dawson, principal at Jackdaw Research.
Both, however, suggested that few people would regularly lean on this 2G crutch. “I imagine many users only want this as an insurance option, and will hardly ever need it,” Dawson said.
Entner estimated that only 20% of VzW subscribers on lower-data plans would pay the $5 surcharge, much less need Safety Mode often. For them, he said, it would be “more of a risk-averse move than a rational move.”
That, in turn, points to a future in which 2G data could become like free texting: something that was once sold at a premium winds up being too cheap to meter. The economics of the business already tilt that way, Dawson said: “The 2G network is basically free on an incremental basis, though, so it doesn’t cost anything for the companies to offer this.”
(Those networks won’t run forever — AT&T plans to shut down its 2G service by the end of this year — but a carrier could still provide the functional equivalent of 2G by throttling back a 3G or LTE connection.)
Unlimited low-speed data could also become a form of “zero rating” that everybody could like. That practice currently consists of a carrier privileging only designated applications by exempting them from data caps — a variety of music and video apps at T-Mobile along with whichever applications are willing to pay for zero rating at Verizon or AT&T.
Instead, you’d have the carrier effectively saying it won’t worry about any sites or apps sufficiently data-efficient to function on a 2G connection. And if the prospect of being always accessible to wireless users turns out to be the kick in the rear that websites need to streamline their mobile versions — please, bring on the free but slow access.
By: Rob Pegoraro (Yahoo).
Photo: Credit.com.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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