AT&T to end unlimited use mobile data plan

NEW YORK Wed Jun 2, 2010 2:44pm EDT

A woman takes a picture with her iPhone during the Dennis Basso Fall 2010 fashion show during New York Fashion Week, February 16, 2010. Picture taken February 16, 2010. REUTERS/Brendan McDermid

A woman takes a picture with her iPhone during the Dennis Basso Fall 2010 fashion show during New York Fashion Week, February 16, 2010. Picture taken February 16, 2010.

Credit: Reuters/Brendan McDermid

Related Topics

NEW YORK (Reuters) - AT&T Inc will stop offering an unlimited pricing plan for new subscribers to its mobile data services, in a move it says will cut prices for as many as 98 percent of its customers.

The exclusive U.S. provider for Apple Inc's iPhone said the new metered pricing, which takes effect June 7, means the more customers use their phones for web surfing the more they will have to pay.

While pricing for most data users will be $5 to $15 less than the current $30-a-month plan for unlimited usage, prices for AT&T's heaviest will be at least $5 a month higher.

Analysts said the move would likely push bigger rival Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, to follow suit shortly. Verizon Wireless declined to comment.

Bernstein analyst Craig Moffett said the lower fees for light users was an important step "for public relations" but he noted that this would not help the heaviest users.

"The low end price reduction for light users will reduce - but not eliminate - the inevitable firestorm of criticism from heavy users, who are certain to be the most vocal commentators," Moffett said.

While some web commentators complained loudly about the new pricing, AT&T's mobile chief Ralph de la Vega told Reuters, "It's important we give customers the choice. There are some not signing up for smartphone data plans because they're too expensive," he said.

De la Vega said the new plans would have little impact on its average monthly revenue per user (ARPU), an important measurement for wireless operators.

Current customers can continue to use the company's $29.99-a-month unlimited data plan, but new customers will be shunted to the new plan.

The new plans will start at $15 a month for downloads of 200 megabytes of data. That equals about 400 web pages, 1,000 e-mails with no attachments, posting 50 photos online or 20 minutes of video, according to AT&T.

But if users exceed the 200 megabytes usage they will automatically be charged another $15 for another 200 megabytes. The company said 65 percent of its users use less than 200 megabytes of data per month.

The next tier costs $25 for 2 gigabytes of data, which is ten times more downloads than the 200 megabytes plan. AT&T said 98 percent of its customers use less than 2 gigabytes of data today.

The $25-a-month customers will be charged another $10 for each extra gigabyte of data they download per month.

If the result is fewer downloads from very heavy users, the new pricing plan could potentially also ease capacity constraints that have caused network problems for the company in high usage areas such as New York.

But de la Vega said the new pricing would not change AT&T's efforts to improve its network capacity.

Only a month after its launch the new pricing plans will also impact buyers of Apple's iPad, for which AT&T is also the only U.S. service.

Users of iPad will now be offered $25-a-month plans for 2 gigabytes of data, replacing the current $29.99 unlimited plan for these customers.

AT&T shares were up 18 cents to $24.51 in morning trade on New York Stock Exchange.

(Additional reporting by Ritsuko Ando and Franklin Paul; Editing by Derek Caney)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (27)
Potatoe1 wrote:
To all the IPad and IPhone users, all I can say is I told you so. Exclusive contracts lead to exclusive pricing. My first computer was proprietary and after the burn I got from that (very expensive upgrades), I have been PC compatible ever since and would never buy a phone or laptop with only 1 carrier.

Jun 02, 2010 10:37am EDT  --  Report as abuse
Ananke wrote:
This essentially aims against internet voice telephony – Skype, etc. AT&T doesn’t like losing long distance money :)

Jun 02, 2010 10:50am EDT  --  Report as abuse
smartin6 wrote:
@YouToldMeSo… Current plan subscribers are unchanged, it is only the new subscribers plans that have changed. So current customers are not “getting burned” as you put it. This could only hurt the sales of the new iPhone.

Jun 02, 2010 11:09am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.