4G data plans: Less choice than the competition might indicate

Struggling cellular carrier T-Mobile USA, fresh from merging with pay-as-you-go provider MetroPCS, has been hinting for months about a radical new approach to data plans for smartphones and tablets. Those plans went public this week and bear out T-Mobile’s claim of offering better deals than its competitors. The only “radical” part of the long-awaited plan is that you won’t have to purchase additional data as you approach your cap, but you will see your speed severely throttled. Don’t be fooled by the lack of a two-year contract either; U.S. cellular networks are largely incompatible, so you can’t move a phone from one carrier to another, except between AT&T and T-Mobile — and then only for 3G service.

Those lower prices come with three potential costs:

• No iPhone, though that changes when the iPhone 5 becomes available on T-Mobile on April 12.
• The end of subsidized smartphones, though customers can pay on an installment plan to lessen price shock. Once you’ve fully paid for the phone, your bill goes down — which is not the case with the other carriers.
• Poor coverage in many parts of the country, though T-Mobile has finally begun investing in sorely need infrastructure, which will take years to accomplish.

Once you do the math on the often-confusing options (see my calculations later in this article), the data plans tend to break into two broad camps: T-Mobile and Verizon are the relative bargains, while AT&T and Sprint come with higher costs. For many usage scenarios, the four carriers’ prices are very similar.

Service quality continues to vary considerably, with each carrier having sections of the country with great coverage and speed, and other areas where the coverage is spotty and unreliable. Your odds of coverage are highest to lowest in the following order: Verizon, AT&T, Sprint, and T-Mobile. For LTE 4G coverage, the odds follow the same pattern, but the odds are steeper: Verizon has by far the most coverage, AT&T has moderate coverage, Sprint has isolated coverage, and T-Mobile is only now starting to deploy LTE, though it’s inheriting limited LTE coverage in some urban areas from MetroPCS. T-Mobile’s first LTE cities are Baltimore, Houston, Las Vegas, Kansas City, Phoenix, San Jose, Calif., and Washington, D.C.

The bottom line is that it matters where you are, AT&T and Verizon included, though they have the largest coverage areas. Even with the same city, coverage quality can vary dramatically, due to both signal available and network saturation.

Given the lack of price difference in many usage scenarios and a consistent set of popular devices supported, the right choice for your carrier more and more comes down to where you use the service.

Clearly, the competition among four carriers has done nothing to spur meaningful innovation, whether in technology or in business approaches. In fact, it has made the carriers more the same, while also raising prices. For example, Verizon’s Everything plans last summer actually raised total spend for customers, yet customers did not flee. That sent a strong signal to the other three that there was room to charge more — and they have.

You have to wonder why the United States bothers with having four cellular carriers, considering the similarity between their offerings. It would frankly make more sense to unify the wireless spectrum and have all the carriers use it based on demand. This approach to using the public airwaves would get rid of the silly lock-in and overcome the disparate service quality from region to region as smartphones and tablets would no longer be bound to one network.

That notion has a snowball’s chance in Hades of occurring. If there’s any comfort from today’s cellular plan quadropoly, it’s that you can focus on what matters most — service quality — and worry about pricing only if your area has at least two strong providers.

The table below shows the current state of data plan pricing from the national carriers.

How does this translate into your reality? I’ve put together several usage scenarios in the table below. The “digital” single, couple, and family plans assume high usage, so I chose the most unlimited plans available for those. The “sem-digital” plans assume moderate usage of both voice and data, so I selected plans with about 450, 900, and 1,500 voice minutes for singles, couples, and families, as well as non-unlimited data plans, for those carriers that offered such optoins. The “simple” plans assume no data or text messaging usage.

Green = cheapest plan in class; red = costliest plan

This article, “4G data plans: Less choice than the competition might indicate,” was originally published at InfoWorld.com. Read more of Galen Gruman’s Mobile Edge blog and follow the latest developments in mobile technology at InfoWorld.com. Follow Galen’s mobile musings on Twitter at MobileGalen. For the latest business technology news, follow InfoWorld.com on Twitter.