AT&T Mobility (T) stirred up the market late yesterday announcing changes to its mobile data plans that increases both the cost and yield of those packages.
The carrier said that its formerly entry-level data package that provided 250 megabytes of data for $15 per month has been replaced with a 300 MB plan for $20 per month. The previous 2 gigabytes for $25 plan was replaced with a 3 GB plan for $30, while its Data Pro that includes hotspot and tethering capabilities is now priced at $50 per month for 5 GB instead of $45 for 4 GB. The two top-end plans are also the new tablet plans.
Customers on current plans will be allowed to keep those offerings. It should be noted that the new plans up with rival Verizon Wireless at the $30 price point. AT&T Mobility was also the first carrier to move to capped data plans for its smartphones, having instituted the change in mid-2010.
“Customers are using more data than ever before,” said David Christopher, chief marketing officer of AT&T Mobility and Consumer Markets, in a statement. “Our new plans are driven by this increasing demand in a highly competitive environment, and continue to deliver a great value to customers, especially as we continue our 4G LTE deployment.”
The news, while appearing to be just a minor rate-plan tweak, sent ripples through the industry as analysts noted that while the plans do provide lower per-MB pricing for customers, they also increase the entry point for customers looking to move to smartphones.
“If the argument holds true, then the pricing is a benefit, with cheaper pricing per GB with the new plans,” noted Eddie Hold, VP of Connected Intelligence at The NPD Group. “But on the downside, if we don’t need more data, then the new plans make the jump into smartphones just that bit more expensive, especially with the lack of those often-talked about family data plans still conspicuously absent.”
AT&T Mobility noted that the price change was due to consumers using a greater amount of data. The NPD Group noted that in a December survey, AT&T Mobility customers were using on average less than 1 GB of cellular data across the carrier’s network, compared with nearly 2.5 GB of data traffic over a Wi-Fi connection. By comparison, T-Mobile USA customers used the most traffic over their cellular connections – nearly 2 GB – along with more than 4 GB of total data transmission over their smartphones across both cellular and Wi-Fi connections.
Macquarie Equities Research noted in a report that the price change could be tied to “disappointing postpaid [average revenue per user] trends” during the fourth quarter for AT&T Mobility, and that the move could spell trouble in the marketplace.
“While we generally regard price increases as a positive in a deflationary industry such as telecom, we think the timing of these changes places [AT&T] at risk of significantly increasing churn, before [AT&T] has significant LTE coverage to match [Verizon Wireless],” the firm noted. “Additionally, Sprint is more competitive on gross adds with the iPhone and [T-Mobile USA] is likely contemplating retention marketing plans, in our view.”
The firm also noted that the price changes could be a strategic move by the carrier ahead of an expected launch of Apple’s latest iPad in March.
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