Last week, in advance of the unveiling of the new iPhone 4G and the iPhone OS4 operating system a little bit later today by Steve Jobs at Apple's World Wide Developer Conference, AT&T announced that it is dropping it's unlimited data plans for iPhones.  Of course they did not spin it this way but instead of its current $30 unlimited plan, AT&T is moving to a $15 200MB plan and a $25 2GB plan.  The unlimited plan is going away.  Buh bye.

Oh the irony.  This is AT&T, the company that made $19.95 unlimited Internet pricing the market standard.  That $19.95 all you can eat pricing exploded the use of the Internet and was the first shot to the body of AOL which at the time had metered pricing.

Let me tell you something.  I was hanging out in the Internet industry back then.  Consumers hate, absolutely hate metered Internet plans.  They don't understand metered data pricing models.  They don't understand data use pricing models because they are complicated.  Go try and calculate how much you consume.  

I have conducted a good deal of research on this subject.  Consumers will pay significantly more per month for a flat rate plan in lieu of having to monitor their usage or getting the big bill one month.  Most will pay a 25% premium for a flat rate plan and many will pay a 50% premium.  And if you are a smart access provider, you price your services so that the flat rate non use breakage of the lighter users makes up for the heavier user behavior.  This enables you to make money by rapidly growing your user base.  You have to have the flat rate to remove consumer uncertainty which creates purchase hesitation.  

AT&T knows this.  They are looking to stop data consumption by heavier prospects/users by getting them to move to other networks, and get lighter data consumers to buy the $25 plan to remove billing uncertainty.  The former is the quickest path to improve the overall performance of the AT&T network while the latter will help with margins.  And once AT&T spends a little time actually building out a more robust network I expect that AT&T will return with an unlimited plan.  And the price will be more than $30 a month.