AT&T Wireless Services Inc. introduced new pricing plans last week that could build on the success of the carrier’s Digital One Rate plan by adding more phones into the home. Bell Atlantic Mobile also introduced a group calling plan for the Southeast.
AT&T Wireless unveiled the AT&T Family Plan, the strength of which lies in offering family members up to five handsets with unlimited calls made among them and to their home phone number in a designated geographic area.
Families must choose from three plans that include buckets of minutes customers use outside the family plan-either to non-family members or within a larger home calling area that falls outside the family program’s geographic area. The pricing plans include: 60 minutes for $25 per month, 400 minutes for $50 per month and 600 minutes for $70 per month.
At least one family member must purchase either the $50 or $70 plan and all members must have digital multinetwork handsets. Customers on other plans like the one-rate plan also can add their family members on the new plans. AT&T Wireless, in a short-term promotion, is selling two L.M. Ericsson handsets for the price of one.
In conjunction with the wireless offer, AT&T Corp. announced cheaper landline long-distance rates of 7 cents per minute with a monthly fee. Families that sign up for the new wireless plans receive the new landline long-distance rate without the monthly fee. Wireless long-distance calls cost 15 cents per minute.
“The plan we believe is very unique in this space and will meet an unmet need in this market,” AT&T Wireless Chief Executive Officer Dan Hesse told RCR. “We’re going to significantly increase average revenue per family. Our expectations are that this will be profitable.”
Carriers traditionally have targeted the profitable high-end business user, but as that market tops out, operators are finding significant value in selling additional lines into existing wireless accounts. Many carriers, including Sprint PCS and AT&T Wireless, already offer group calling plans to business users.
Today, according to research firm Strategy Analytics, about 40 percent of subscribers live in homes with multiple mobile-phone users. Other carriers like Sprint PCS and AirTouch Cellular are offering plans that allow two users to share minutes on one pricing plan.
Bell Atlantic Mobile last week introduced in the Southeast calling plans that allow customers who sign up for digital service with 250 or more minutes to share their monthly minutes with up to four different users for an additional $13 each, per month. BAM already offers in all its markets unlimited mobile-to-mobile calling service for an extra $10 per month. All calls must originate and terminate on the BAM network in the customer’s market and each BAM cellular phone must be from the same market.
“The new Family Plan tariff is, in our opinion, only the first shot in a long and bruising battle for the minds and dollars of the residential customer,” said David Kerr, director of wireless programs with Strategy Analytics. “AT&T has enjoyed strong new subscriber adoption rates on a quarter-by-quarter basis, largely as a result of its Digital One Rate plans. [The] announcement will provide further fuel for subscriber growth while simultaneously contributing to both lower costs of customer acquisition and lower churn levels.”
Kerr believes, however, that AT&T Wireless’ $25 monthly entry-level price point for additional family subscribers is still too high to convert the majority of single-user homes to multiple-user homes. Given inevitable pricing pressures, though, charges for additional lines should quickly drop to more compelling levels.
AT&T Wireless has chosen not to introduce the plans in New York, where the carrier has taken many media hits over capacity problems spurred by the success of its one-rate offer. AT&T Wireless still has not introduced business group calling plans in New York and has significantly scaled back its Digital One Rate marketing efforts there.
“We have decided to delay the launch there and wait and see until we have real network data,” said Hesse.
In other markets, Hesse said he doesn’t expect the new offer to contribute to any network congestion.
“We have modeled the heck out of it,” he said.
AT&T Wireless also is delaying the plan’s introduction in Los Angeles-where it recently took management control from BellSouth Corp.-and in newly acquired Vanguard markets.
In related news, AT&T Corp. Chairman Mike Armstrong said last week the company is on target to meet Wall Street’s expectations for the third quarter.
