AT&T Launches New Data Pricing
In a move that will eventually be copied (in some form) by other wireless (and possibly home broadband) providers, AT&T has moved to a tiered, usage-based data pricing for its smartphone devices.
The previous smartphone/iPhone/BlackBerry data plan, at $30 month, was for unlimited usage. Going forward (current customers are not required to switch), purchasers of the will be able to choose a 200 MB DataPlus plan for $15/month or 2 GB for $25/month. Those on the lower-priced plan who exceed their bucket will be charged $15 for an additional 200 MB. Those exceeding the bucket on the higher plan will receive an additional 1 GB of data for $10. All plans include unlimited AT&T Hot Spot access on Wi-Fi capable devices.
- For light users of data (emails with no attachments, web browsing), there is an opportunity to save up to 50% on the prior cost of smartphone data. (AT&T claims 65% of its smartphone subscribers fall into this category). Since all other national carriers have a required smartphone data plan of about $30, AT&T may have an opportunity to poach some of those customers
- At the same time, by grandfathering in existing customers with the unlimited plan, AT&T reduces the risk that those people will defect. It is unclear if/when Verizon or another carrier will have the Apple iPhone, but this move may help AT&T retain those customers when the phone does become more widely.
- The overage pricing structure somewhat discourages taking the 200 MB plan, as the monthly cost doubles if that is exceeded. It is also somewhat punitive that any excess doesn’t roll over to subsequent months, as AT&T does with its Rollover voice minutes. If a user ends up going over their allowance two days before the end of the billing cycle, they will still be charged $15 even though it is unlikely they will utilized much of that data.
- For the heaviest 2% of users (those that AT&T says exceed 2 GB usage per month), the price for data will increase, perhaps sharply. For example, someone that uses between 5 and 6 GB per month, will now pay $65, more than 100% increase. As we mentioned earlier, existing smartphone customers can keep their unlimited $30 plan, so initially this will impact a small number of people. In fact, this may be a tacit effort to get prospective new customers who would tax their network to go somewhere else. At some point, when AT&T’s network fully catches up to the exponential use of data, we would expect the carrier to introduce at least one new high allowance tier, to be perceived as more welcoming to heavier users.
- The other quirky thing about the new data pricing is that AT&T is now the only carrier where a smartphone rate plan can be cheaper than a quick messaging phone rate plan. AT&T voice rate plans start at $39.99, making the lowest monthly cost on a smartphone plan $54.99 ($39.99 + $15 data plan). However, that minimum cost is $59.99 for quick messaging plans, as those require at least $20 of some combination of messaging and non-smartphone data plans. Given how profitable text messaging is for carriers, this non-competitive high minimum monthly cost (vs. other carriers) in this category is somewhat surprising.