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The Myth of Unlimited Data Plans: Necessity or Ruse?

An Unlimited plan for everyone is what the industry promises. But does everyone actually need an Unlimited plan? To know for sure, we took a close look at how Americans use data, what amount of data they consume on average, and whether the premium they pay for all-you-can-stream data is really worth it. Below, you will find excerpts from U.S. Mobile Data Consumption and the Myth of the Unlimited Plan, an Oct/Nov 2019 report co-authored by Reach Mobile CEO Harjot Saluja and Mung Chiang, a distinguished professor at Purdue University. 

Unlimited data and the myth that's costing us thousands

U.S. consumers love the promise of unlimited data – but is that really what they get? Furthermore, is it even what they need? We analyzed the market, combed through the fine print of popular Unlimited plans, and polled 400 consumers. Here’s what we found out:

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Background

More than 96% of Americans today own a cellphone, and approximately 1 in 5 use a smartphone as their primary means of online access.[i] The United States consumes the most data of any developed nation, usage that nearly quadrupled between 2014 and 2017.[ii]  On average, Americans pay $80 per month for their cell phone plans and look at their phones 52 times on average each day.[iii] It's no wonder, then, that marketing unlimited connectivity has proven to be a smart tactic for carriers.

 

The High Cost of ‘Unlimited’ Data

The dictionary defines unlimited as “not limited or restricted in terms of number, quantity, or extent.” Unlimited data plans, on the other hand, follow a looser definition.

Most have a limit of 20-24 GB of data. While connectivity doesn’t necessarily cease when the limit is reached, data speeds are typically slowed or throttled by the carrier. Some plans even de-prioritize users, as in they throttle their speeds before the data limit is reached based on network congestion.

According to the US Labor Department consumer price index for wireless service, cell plan costs rose 0.3% in June of 2018 over the year prior.[iv] Furthermore, the primary method for U.S. telecom price increases is upping the cost of unlimited data plans. As of 2018, some MNOs had raised the pricing of grandfathered unlimited data plans for the third time in a decade.[v]

As a result, Unlimited plans prove to be the most profitable offerings for carriers and often the more expensive option for consumers. 

Myth Busting the Unlimited plan

But do Americans really need what they're paying for? Does actual data usage justify the added expense, or have savvy marketers convinced us of this need? Our findings reveal that for unlimited users, perceived usage far outweighs actual; and that perhaps loyalty to current carriers and unlimited plans may be faltering. As consumers become more informed about how connectivity works and how data is consumed, it is only logical that they begin to question their own personal need for unlimited data.

To discover more insights (like how nearly 50% of respondents chose an Unlimited plan because of their perceived high usage, yet an overwhelming majority - 85% - use less than 10 GB each month), access the full report here.

 

 

Resources:

[i]  https://www.pewinternet.org/fact-sheet/mobile/

[ii] https://www.ctia.org/the-wireless-industry/infographics-library

[iii] https://variety.com/2018/digital/news/smartphone-addiction-study-check-phones-52-times-daily-1203028454/

[iv] www.theverge.com/2018/7/20/17595822/cellphone-plans-att-verizon-price-increase-cost

[v] https://www.theverge.com/2018/6/7/17437824/att-unlimited-data-plans-price-raise

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