Verizon appears ready to eliminate unlimited data plans from new offerings this summer. The move emulates rival choices made in the past year or so. Will unlimited data ever come back? Perhaps. Here is what one has to consider. The demise of unlimited data plans can be traced to two key events. First, the marginal cost of additional usage by the consumer is no longer necessarily zero. Remember that price falls toward marginal cost in hotly contested markets with high fixed costs and low marginal costs. Heavy usage can tax networks as we have seen, and video and other apps soak up bandwidth (meaning marginal costs do rise at some point). Second, recent consolidation means fewer rivals. With fewer competitors, the chances of maintaining this pricing increase goes up. With many rivals, the chances of some players cutting price (by offering unlimited plans) would be much higher.
Could unlimited plans return? Well, if the marginal costs of incremental usage go back toward zero as technology evolves and bandwidth increases, or if new entrants emerge, then we may indeed see them return.