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Mobile users wary of usage-based pricing: survey

* Consumers have negative view of usage-based pricing

* Even low users say they would prefer unlimited

* Preference for unlimited to stall user-revenue decline

* Usage-based made consumers more negative toward AT&T

* Survey pre-dated Verizon Wireless usage-based offer

NEW YORK, Nov 18 (Reuters) - Consumer users of mobile devices in the United States prefer unlimited data plans over usage-based pricing plans even if it means paying more, according to a Bernstein survey.

After years of offering unlimited-use plans, U.S. mobile providers have been experimenting with pricing based on how much data a customer downloads.

AT&T Inc T.N has stopped selling unlimited pricing plans in favor of usage-based fees, and bigger rival Verizon Wireless followed with a usage-based pricing (UBP) promotion.

“Customers generally have strongly negative perceptions about UBP, and these are often not correlated with self-interest,” Bernstein analyst Craig Moffett said in a research note that summarized the findings of the survey, which was carried out in July.

Noting that the results could have been affected by the fact that the survey took place before Verizon Wireless announced its usage-based promotion, Moffett said a third of respondents reported more negative feelings about AT&T due to the new pricing, which was announced in June. [ID:nN02173229]

But AT&T spokesman Mark Siegel said customers had reacted well to the plans. “The response to our tiered plans has been strong, not only with existing customers, but with customers who before didn’t have a smartphone but now do because of our new lower pricing,” he said.

Moffett said that the trend for usage-based fees is not likely to hurt the industry’s average revenue per user as respondents say they would pay more to avoid usage-based pricing. AT&T allows existing customers to stick with unlimited pricing until they change their device.

According to Bernstein, more than 58 percent of the lowest data users said they would change carriers for an unlimited plan. The percentage rose to 67 percent for the highest users.

Usage-based pricing aims to ease network strain from heavy data users who are taking advantage of unlimited usage, as well as attract new users to data services with lower-priced bundles.

According to Bernstein’s survey, this element will work to a certain extent. Moffett said that when survey respondents who did not own or plan to own a smartphone were told of AT&T’s lower-priced offers, 22.6 percent said the news would make them more likely to upgrade to a smartphone.

While the number looks small, Moffett calculated that it could mean 7.7 million new data users for AT&T, after adjusting for customers who do not already use data services.

In summary, Moffett said that “survey suggests that carriers have a ways to go in educating customers” about how unlimited pricing and usage-based pricing would affect them.

Verizon Wireless is a venture of Verizon Communications VZ.N and Vodafone Group Plc VOD.L. (Reporting by Sinead Carew; Editing by Steve Orlofsky

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