07/01/2011 08:42 am ET Updated Aug 31, 2011

Will Data Metering Take Us Back to the Not So Good Old Days

When I was a kid, you had to be at home or at work to make or receive a call and if you wanted to watch a movie on a TV screen, you had to wait until one of your few local stations put it on the air.

The "good old days" weren't all that good

The closest thing we had to texting was telegrams. According to the Federal Reserve Bank of Dallas, the average person in 1960 had to work for 84 minutes to earn enough to send a 10 word international message.

Long distance calls were so expensive that my family, which lived in Los Angeles, only called our New York relatives on special occasions. In 1964, the Associated Press ran a story about AT&T "slashing" long distance rates to $1 per three-minute call after 8 p.m. and all day Sundays. People who traveled overseas had to wait in line at railway stations to pay $10 a minute to call back to the United States.

I remember how excited I was in the late '70s when it finally became possible to dial into MCI's network and then punch in a code and a phone number to get the cost of a domestic long distance call down to only 16 cents a minute. For many of us, domestic long distance and even some international calls to land lines are now free.

But my mom and dad's recurring monthly bills were relatively low. In the '60s, the average family paid about $10 a month for phone service and maybe a few dollars to subscribe to a newspaper. Adjusting for inflation, $10 in 1965 would be $72 today, but it's still cheap compared to the more than $200 a family of four might spend for unlimited cellphone service in addition to $100 or more for cable or satellite TV, plus $20 to $50 a month for Internet service.

Still, most of us pay these costs because we're enjoying not only unlimited communications via voice, text and email but also access to vast amounts of data, entertainment and information.

Metered Data

But there is a wrinkle. Cellphone companies and some home Internet service providers are starting to measure how much data we use and charge us accordingly. Last week, Verizon Wireless announced that it will join AT&T in eliminating unlimited data plans. Pricing hasn't been announced but "most of the rumors," according to the Los Angeles Times, "predict that Verizon will charge $30 a month for 2 gigabytes of data." AT&T currently charges $15 for 200 megabytes, $25 for 2 gigabytes and $45 for 4 gigabytes.

To put those numbers into context, AT&T's website has a chart that claims that 2GB is sufficient for 10,000 emails, 4,000 pages of Web browsing, 500 photo uploads and 200 minutes of standard quality YouTube videos.

While that sounds like a lot of data, you could easily exceed it if you use your device to stream movies or TV shows from Netflix, HBO GO or any of the other streaming services offered for home and mobile use. Netflix already has iPhone and Android apps. You might think you'll never watch a full length movie on a phone, but lots of people watch movies on iPads and other tablets and, increasingly, use phone "tethering" plans to connect their laptops to the Internet. So a lot of people may wind up bumping against these data caps.

Of course, it's always possible competition will drive prices back down. After all, Sprint and T-Mobile still have unlimited plans, and Sprint is aggressively advertising its "Simply Everything" data plan, which it says "allows customers to use their mobile phones as much as they want without unexpected surprises on their monthly bills due to data overage charges or throttling." Sprint recently increased its data charges by $10 a month, but even more worrisome is the fact that the competitive landscape is shifting.

Shifting landscape

Unless federal regulators stop it, AT&T will soon acquire T-Mobile, which makes me worry that Verizon might try to buy Sprint. If that happens, competition in most markets will be reduced to two major companies plus some smaller players that have to buy network capacity from one of those two.

Of course, there are always land-based services like cable modems and DSL. But even those services may soon be capped. Time Warner and AT&T already have "usage" or "overage" fees in some markets. At 250GB a month, Comcast's data is relatively generous but even that may not be enough for everyone. Comcast says that's enough to watch 125 standard definition movies, but high-definition movies take up even more bandwidth. So it's not out of the question for a family of movie buffs to exceed that limit, especially if you consider that most households have multiple screens sucking up bandwidth at the same time.

I'm not sure how this will all shake out, though I doubt that data charges will force us back to the days when families all sat together watching Ed Sullivan or Walter Cronkite on the household's one TV set. But in some respects, it might not be such a bad thing if that were to happen.