Why Unlimited Smartphone Data Plans Make No Sense

By Elmer W. Cagape

Even as we see a growing number of uses of smartphones in Hong Kong, inevitably taking up greater data usage, I am not convinced subscribers should go with unlimited data plans.

For a city whose cost of maintaining post-paid plans is among the lowest in the world, Hong Kong subscribers would rather pay a small incremental amount instead of taking the cheaper network package available.

Typically, telecom companies offer multiple tiers of plans to customers based on frequency and length of calls. Subscribers who seldom use their phones may opt for the lowest (and cheapest) plan while those who expect to use more air time minutes are likely to select plans with higher caps. Selecting a cheap plan comes with prudence to ensure air time usage do not exceed a certain number of minutes; those who fail to do so are subject to costly surcharges. People who have irregular phone usage may consider taking up high-end plans which may also include perks such as free SMS and handset rebates.

With the advent of smartphones that allow people to surf the web, chat and watch videos while on the go, telecom companies have added data plans to cater to this segment in the market. Some subscribers only check emails while others spend more time on playing streaming videos or playing online radio, hence the varying trend in data usage. Users who consume less bandwidth may feel safe if they pick the cheapest data plan. But for those who use more data may find subscribing to unlimited data plan more practical than constantly monitor their usage.

However, as telecom companies see that unlimited plan users usually use much less data than thought as well as adopting regulator requirements, rationalizing data plans by removing unlimited packages may be the way to go. That’s the case of SmarTone, a Hong Kong telecom company, which informed the public of the change. The revision of plans also frees up SmarTone from complying with guidelines set forth by OFTA, Hong Kong’s telecoms regulator. The guidelines say service providers offering “unlimited” plans must ensure they offer the service free from any restrictions, such as limited service during peak hours. If such limitations are considered necessary, operators may offer packages with high usage caps instead of the unlimited plans.

The move prompted customers to rush to renew contracts of unlimited plans. But shortly after its announcement, SmarTone made a flip-flop, and decided to resume offering “unlimited” plans with a new condition: subscribers who reach 5 gigabyte usage in a month would lose network priority during busy times. In a way, it’s still unlimited data usage, only with reduced priority.

Before we start making complaints about this change, it may not be worth protesting if we realize we actually use much less data than we think. According to OFTA director-general Eliza Lee, many subscribers are using less than 0.5 gigabytes a month. She believes that as people do not want to see shocking charges reflecting on their next bill, they subscribe to unlimited data plan to put their minds at ease.

OFTA records show that in October 2011, average data usage was 463 megabytes per mobile broadband user. This is less than a quarter of SmarTone’s new 2 gigabyte cap. In case you’d like to know how much data does accessing YouTube videos or listening to online radio actually consumes:

500MB corresponds to number of:

• basic webpages (mainly text): 5,000
• rich webpages (with multimedia, e.g. BBC): 1,500
• basic e-mails: 500,000
• rich e-mails (with attachments): 1,000
• downloading/streaming music: 100 songs
• downloading/streaming video: 1 hour
• Skype voice call: 15 hours
• Skype video call: 2 hours
• listening to online radio: 8 hours
• downloading/updating apps: 80 apps
  Source: Ken’s Tech Tips

I guess that with lack of information on the part of subscribers, they end up spending more for less. While it takes time to do research, it saves you money once you make informed decisions. Otherwise, you’ll have to wait for up to two years before you can do so.