Is the iPhone’s success hurting AT&T?

Chicago (IL) – Martin Peers of The Wall Street Journal reported that the ever growing popularity of the iPhone is putting a strain on the AT&T network, potentially more strain than the carrier can accommodate. Peers’ recommendation? Stop offering unlimited data plans completely.

As users are beginning to rely less and less on actual voice calls, and instead use data, analysts predict that the success of devices like the iPhone, which allows users to communicate via the Internet and a Wi-Fi connection easily and effectively, will cost wireless providers more money than it’s worth. In fact, the Wall Street Journal suggested that the income from web browsing and data usage is not profitable as users are able to utilize unlimited amounts of bandwidth.

Peers found that iPhone users overuse bandwidth, and pay the same rate, $30 for unlimited data, as all other users on the AT&T network.

Users are able to download applications that rely on excessive bandwidth – for example, the iPhone port of Myst is 700 MB, and users can additionally stream videos and play games. Apparently, iPhone users consume four times more bandwidth than the average smartphone.

Unlimited data is offered to customers because pricing data can be somewhat confusing, and many users will shy away from purchasing a phone in which they have to monitor their usage to avoid hefty charges. A price increase on unlimited data plans might also cause strain, as there is heavy competition these days and Apple and AT&T are rumored to be nearing a contract expiration date.

AT&T is expected to reduce the cost of its contract by $10 each month to hang on to the exclusive agreement with Apple.