That did not take long.
Just weeks after Verizon Wireless rolled out its controversial shared data plans, rival and fast follower AT&T Mobility said it will have similar offerings beginning in late August. The plans will include a bucket of data that is to be shared across multiple devices, along with unlimited voice and messaging. AT&T Mobility has also picked up on the same guise used by Verizon Wireless, noting the plans will make it easier for consumers to manage their wireless services.
However, unlike Verizon Wireless, AT&T Mobility noted that the new offerings will be merely an option for new customers, and not a requirement. The carrier also noted that current customers can select the new plans without extending their contract and that the new plans will not alter the carrier’s device upgrade policy. This last point was the main bone of contention surrounding Verizon Wireless’ move as the carrier will only allow current customers to maintain their current unlimited data package if they decline to take a device subsidy.
Now down to the nitty-gritty.
AT&T Mobility requires customers to have at least one smartphone on the plan. Data bucket pricing is staggered at $40 for 1 gigabyte; $70 for 4 GB; $90 for 6 GB; $120 for 10 GB; $160 for 15 GB; and $200 for 20 GB. Adding a required smartphone runs $45 per device on the 1 GB plan; $40 on the 4 GB plan; $35 on the 6 GB plan; and $30 on the remaining plans. “Basic” and “messaging” devices, or those that are not considered smartphones, runs $30 per device; laptops, mobile hotspots and wireless modems run $20 per device; and tablets and gaming devices run $10 per device.
AT&T Mobility also includes free access to its more than 30,000 Wi-Fi locations with the plans.
By comparison, Verizon Wireless charges $50 per month for 1 GB of data; $60 for 2 GB; $70 for 4 GB; $80 for 6 GB; $90 for 8 GB; and $100 for 10 GB. For customers needing more, the carrier charges $10 for each additional 2 GB. Device pricing is at $40 for each smartphone; $30 for each “basic” phone; $20 for each wireless modem or hotspot device; and $10 per tablet.
Both carriers charge $15 per GB for overage.
It should also be noted that both carriers lump 3G and LTE data usage into the same bundle, which with the reported fiscal savings in serving data over LTE compared with 3G could spell a stronger windfall to the bottom line as customers continue to migrate to LTE services.
From a competitive perspective, AT&T Mobility seems to be slightly less or dramatically more expensive than Verizon Wireless depending on selection, which is good news for its investors. (AT&T is set to announce second quarter results on July 24.)
“We expect the Mobile Share plans to be a positive for AT&T going forward as they should help drive additional data usage and device adoption and help maintain [AT&T Mobility’s] already low levels of postpaid churn,” noted Wells Fargo Securities senior analyst Jennifer Fritzsche in a research note.
Whether a customer will pay more or less between the two operators is based on a significant number of variables that are likely to keep customer service representatives busy and may see a run on calculator batteries.
(CNet provides a nice analysis of the price differences.)
More strategically, by allowing customers to choose to participate in the new plans, AT&T Mobility is positioned to win the public relations portion of the competition, as Verizon Wireless’ more hard line approach to the new offering seemed to be what rankled the vocal minority the most. Analysts noted that this could open the door for AT&T Mobility to gain an advantage over its larger rival.
“AT&T’s offering has almost identical pricing but some really important differences in the detail,” explained Ovum chief telecom analyst Jan Dawson. “Most importantly, AT&T isn’t forcing customers into the new plans, which is really important because they’re not the best deal for all customers. In addition, AT&T’s overage charges for data are much simpler, at a flat $15 per [GB], compared with Verizon’s confusing two-tier overage charges. There are some subtle differences in the pricing, too, but they won’t make a significant difference to most customers.”
Dawson added that the biggest challenge will be in educating consumers on the news plans as well as how they handle device subsidies going forward.
“Verizon’s launch highlighted the confusion that exists about the role of subsidies in the minds of consumers, and nothing in AT&T’s launch will alleviate that,” Dawson noted. “We still need a fundamental change in the way carriers talk to consumers about device subsidies in order to educate them on the true cost of devices and service plans, but we’re not getting that with this launch.”
A recent report from Macquarie Equities Research indicated that as carriers continue rolling out LTE networks and corresponding LTE-enabled devices, the need to curtail device subsidies could lessen – at least in the short term.
The report found that that cost to deliver a bit of data over an LTE network was roughly 66% cheaper than delivering that same bit over a 3G-based network. The firm claims that in talking with carriers and vendors, the cost in capital expenditures and operating expenditures to deliver 1 GB of data over LTE is roughly $3.20, while delivering 1 GB over 3G is $9.39.
“One major takeaway is that carriers do not need to reduce subsidies currently,” the report noted. “For the moment, they are better off filling their network with more profitable LTE subs. By 2014, this will begin to change however, as cash ROIC begins to slip.”
Bored? Why not follow me on Twitter?
