Study shows unlimited data plans are slowing wireless carrier speeds

Rob Pegoraro
Contributing Editor

A new study out Wednesday from the research firm OpenSignal says new unlimited data plans offered by the big four U.S. wireless carriers are negatively impacting some networks’ capabilities.

The report determined that AT&T (T) and Verizon (VZ), the nation’s two largest carriers, have seen their download speeds decrease with the release of the new plans. (Verizon’s media division, Oath, includes Yahoo Finance.) But other studies, including one conducted at about the same time, see no such issue.

So which is it?

OpenSignal: Unlimited can be hard

OpenSignal’s “State of Mobile Networks: USA (August 2017)” — based on 5,073,211,200 measurements sourced from the firm’s Android app from March 31 to June 29 — found that unlimited data plans have created network congestion that is clogging AT&T’s and Verizon’s networks.

“The impact of unlimited was particularly evident for Verizon, which saw its average LTE download connection fall 12%, from 16.9 Mbps to 14.9 Mbps,” the report says. It cites a “less pronounced” slowdown at AT&T: “We measured average 4G download speeds on AT&T at 12.9 Mbps, down from 13.9 Mbps in our February report.”

The report gave its highest marks to T-Mobile (TMUS) in all areas: LTE and 3G download speeds, availability (how often a phone has an LTE signal) and latency (the connection’s responsiveness). It found T-Mo’s LTE downloads averaged 17.5 Mbps, up from 16.7, while fourth-place Sprint (S) lagged behind all other carriers, with downloads speeds averaging 9.8 Mbps, which is actually up from 9 Mbps.

You can expect T-Mobile CEO John Legere to tweet about this as much as he did a recent quarterly report from the bandwidth-measurement firm Ookla (the one behind the Speedtest.net site and app) that found a smaller drop in AT&T and Verizon’s speeds.

But wait, there’s more

Legere, however, was not so loquacious about another network-measurement firm’s report. In its newest nationwide study, released July 26, RootMetrics gave Verizon first-place rankings for voice, text and data performance.

And its research, based on almost 4.7 million automated tests performed on roads over the first half of 2017, found no notable slowdown in major markets for Verizon or AT&T’s speeds.

“Despite reports suggesting that unlimited data plans are stifling speeds due to increased demands on the networks, we are not seeing evidence of that in our first half 2017 results,” RootMetrics director Annette Hamilton said in a statement. “At the metro level all four carriers improved median data speeds in at least 20 markets from last half.”

You can argue that since RootMetrics was in the field before the wireless industry’s abrupt turn to unlimited-data plans, it could have missed some slowdown. But that’s not the case for a newer round of automated drive tests conducted by PCMag for its annual Fastest Wireless Networks report.

That survey, based on measurements from May 1 through May 22, showed faster average downloads from three of four carriers compared to last year’s numbers: AT&T jumped from 19 Mbps to 32.6 Mbps, T-Mobile climbed from 19.9 Mbps to 29.3 Mbps, and Verizon improved from 27.8 Mbps to 31.1 Mbps.

Sprint, however, faded slightly from 20.6 Mbps to 20.5 Mbps.

Meanwhile, one carrier has scaled back its unlimited-data offering. T-Mobile ended a temporary promotion adding streaming HD video and full-speed mobile-hotspot use — included on the other three services’ unlimited deals — then last month raised the price for an add-on that restores those features from $5 to $10 a month.

Ultimately, all wireless arguments are local

How can such massive studies yield such different results? Basically, OpenSignal follows customers while RootMetrics and PCMag follow the map. As OpenSignal analyst Kevin Fitchard put it: “We are not measuring coverage, we are measuring where the operators’ current customers are.”

In this case, that can overstate slower performance by Verizon in rural areas while missing the same at T-Mobile — a carrier that has historically been weak outside urban areas, thanks to thinner rural coverage. (I’m a generally satisfied T-Mobile subscriber myself, but still see coverage gaps in the country.) But those same rural areas also stand to get network upgrades after places with more customers.

“We seem to be seeing the brunt of unlimited really in smaller markets and rural areas,” Fitchard said. “And it’s in those smaller markets and rural areas where you don’t have all the major LTE updates in place.”

He suggested that as T-Mobile starts drawing customers farther out in the country, it, too, may see its LTE-availability numbers fall.

But meanwhile, wireless carriers have continued building their networks — a Barclays note to investors this week found “broadly healthy” capital investment across the industry.

There is a risk that carriers are sacrificing future revenues and therefore network investment — as analyst Walt Piecyk with BTIG Research put it, selling an unlimited plan today to subscribers “eliminates the opportunity to charge them more and more as wireless data usage continues to rise.”

But for now, you can feel safe in enjoying your unmetered data.

More from Rob:

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.

 

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