* No mass exodus to Sprint is foreseen -analysts
* Switches may be limited by contracts -analysts
* AT&T limit would allow for about 10 hours of video
By Sinead Carew
NEW YORK, March 2 Big fans of services
like mobile video streaming may switch to Sprint Nextel Corp
after AT&T Inc's move to impose usage caps on its
unlimited data customers, but analysts do not expect a mass
AT&T announced a new policy on Thursday limiting high-speed
wireless data usage for its 17 million customers who still
subscribe to unlimited data plans. The move angered some
customers who think they should be entitled to unlimited usage
if they signed up for an unlimited plan.
AT&T said it needs to limit the data use of its most avid
customers, or face degraded service for all its customers as the
popularity of data-hungry smartphones and tablet computers is
straining the No. 2 U.S. carrier's network.
After customers reach their monthly limit of data usage,
they will still be able to surf the Web and receive emails, but
their service will not work as well for the rest of the month.
Customers will notice the biggest difference if they try to
stream video, AT&T said.
Under the new rules customers would come up against the
limit and have their service slowed down after they have watched
roughly 10 hours of high-definition video, according to AT&T's
Since the company's smaller rival, Sprint, still offers
unlimited data services for a flat monthly fee, some frustrated
customers may opt to leave AT&T for Sprint due to the change.
"It may, on the margin, hurt them a little bit," said Stifel
Nicolaus analyst Christopher King, who expects Sprint's
marketing to focus on this difference as it seeks to attract new
However, customer departures to Sprint may be limited by
several factors, analysts said. For one thing, most AT&T
customers have committed to two-year contracts so they would
face a hefty penalty if they left the service before the end of
And many of those contract customers are signed on to family
plans, so they may balk at moving the entire family to another
service, analysts said.
"Sprint's message of unlimited will resonate a little better
now there's all this negative publicity around AT&T," said
Bernstein analyst Craig Moffett. "But the fact customers haven't
left (AT&T) yet tells you these relationships are stickier than
Another issue in AT&T's favor is that most of its customers
do not consume huge amounts of data to make them subject to the
According to AT&T, more than 95 percent of its roughly 40
million smartphone users are not affected by the policy because
they use less data than AT&T's newly specified cap.
And if the affected customers reach their limit later in the
month, they may not be too worried about having slower speeds
for just a few days, Guggenheim Securities analyst Shing Yin
"I imagine it probably does present a little more risk (for
AT&T) but the risk is probably small," Yin said.
The analyst said that AT&T appeared to have little choice
but to implement the changes because the alternative would be to
risk service degradation for all its customers.
He also suggested that it might not be such a bad thing for
AT&T if the heaviest data users left its network.
"For users of unlimited data plans, those that use the most
data are least profitable, and at some threshold they become
unprofitable. In that case the carrier would be more than happy
to get rid of the unprofitable customers," Yin said.