Last unlimited data carrier: Is Sprint buckling?

A new Virgin Mobile pricing plan and data speed reduction system point to rough times for Sprint

As more and more carriers are shutting down their unlimited data offerings to stem the tide of data over-use and protect their bottom line, Sprint remains the last man standing.  Last week, Verizon became the latest carrier to axe its unlimited data plan, following similar moves made recently by AT&T and T-Mobile, which leaves Sprint as the last Tier 1 carrier to offer an unlimited data plan.  But that’s a heavy title to carry, and it looks like Sprint is buckling under the weight.  On Wednesday, Virgin Mobile, which is owned by Sprint, announced a new pricing system as well as reduced data speeds for those who go over 2.5 GBs a month.

In all, the changes are not that drastic.  The pricing system for the “Beyond Talk” unlimited data plan is actually something of a mixed bag.  The cheapest plan, which includes unlimited data and 300 anytime minutes, is being increased to only $35 a month from its current $25-a-month rate.  The next plan up, which includes unlimited data and 1200 anytime minutes, is being increased to $45 from its current $40 rate.  And finally, the most expensive plan, which includes unlimited data and unlimited minutes, is actually dropping from $60 to $55 a month.

Current Virgin Mobile subscribers can actually keep the plan they’re on now as long as they don’t let their accounts go delinquent.  The new plans are really being instituted for new customers.

That’s not a bad deal at all, if you ask me (and I know you were going to).  The real kicker is how Virgin Mobile plans to discourage super-users from going over 2.5 GBs a month.  Beginning in October 2011, Virgin plans to implement speed reductions for those who go over 2.5 GBs a month, thereby discouraging data overloads while continuing to offer unlimited 3G access.  At the end of the month, the user’s data usage meter goes back to zero, and he/she starts over again with unlimited 3G speeds.

The company declined to comment on how many subscribers it currently has, as well as how many use less than 500 MB a month, but it did say that the new speed reduction plan will affect some 3% of users who do go over 2.5 GBs a month.  By comparison, last year, when AT&T ditched its unlimited data plan, it disclosed that only 2% of its subscribers regularly use more than 2GBs a month.

While the new pricing plan and data speed reduction system probably won’t be deal-breakers for potential Virgin Mobile customers, they do indicate the rough waters that Sprint is currently navigating as the last major carrier to offer an unlimited data plan.  Data usage is climbing at an astounding rate, according to a June 2011 Nielsen study. The average smartphone owner today consumes 89% more data per month than he or she did a year ago—from 230 MB in Q1 2010 to 435 MB in Q1 2011. The rate of growth is even higher among the top 10% of smartphone owners, also known as super-users. Among those consumers, data consumption went up 109%. And among the top 1% of smartphone owners, data consumption went up a shocking 155% each month.

While Sprint has long bragged about being the only carrier to offer “truly unlimited” data plans (see the company’s cocky commercials for proof), it’s acknowledging that times are getting tough.

“We are all facing the same situation and this is the best way for Virgin Mobile to maintain the best network experience as data usage explodes,” said David Trimble, VP of Virgin Mobile, in a statement. “Our no-contract and postpaid competitors like Cricket, MetroPCS and T-Mobile have either implemented more stringent constraints and/or don’t disclose slower speeds and data caps. We believe this adjustment – with no hard cap or overage charges for more usage – gives the most value to the largest group of consumers. It’s important to Sprint and the Virgin brand that we be as up-front as possible with our customers.”

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