May 19, 2009 / 9:23 PM / 9 years ago

AT&T mulls cheaper plans for iPhone

(For other news from the Reuters Global Technology Summit, click here)

By Sinead Carew

NEW YORK, May 19 (Reuters) - AT&T Inc (T.N) is considering offering cheaper data service plans with limited Web surfing for advanced cellphones including Apple Inc’s (AAPL.O) iPhone.

Ralph de la Vega, the head of AT&T’s mobility and consumer business, also told the Reuters Global Technology Summit in New York on Tuesday that he sees a gradual economic recovery.

The executive said it would be costly for AT&T to cut the price of its unlimited Web surfing service, which currently costs at least $70 for iPhone users.

Instead, AT&T could offer more limited Web surfing on cellphones for a lower fee, similar to its trial offer of 200 megabytes of data downloads for wireless netbook users for $40 a month in Atlanta and in Philadelphia.

“Right now we continue to study what is the best thing that is available, not just from an iPhone point of view, but what you can do to stimulate additional demand,” said de la Vega, who is responsible for all of AT&T’s consumer sales along with his role as chief executive of the mobile business.

He also announced at the summit that AT&T will expand sales of netbook computers from Dell Inc DELL.O, Acer Inc (2353.TW) and Lenovo Group Ltd (0992.HK) to all AT&T stores this summer. It currently sells netbooks only through retail partners and in AT&T stores in Atlanta and Philadelphia. [nN19424078]


Some analysts expect AT&T to offer an iPhone without a data plan in future but de la Vega dismissed the suggestion, saying it would not be a very good business plan for AT&T, which is very dependent on data services for future growth. [nN12EUTERS]

“Our business is to sell services,” he said, adding that AT&T doesn’t make money from the sale of devices like the iPhone, which it subsidizes heavily.

He declined to comment on negotiations with Apple for the extension of its exclusive U.S. agreement to sell the iPhone. Bigger rival Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), has said it has also had talks with Apple about wireless devices.

“We view Apple as a strategic partner for us, a very good partner to have now and into the future,” de la Vega said.

    When AT&T launched the latest iPhone last year, the operator’s mobile profit margins fell for a few quarters due to big subsidies it offered for the Apple phone.

    De la Vega said AT&T expects wireless profit margins in the range of 40 percent to 45 percent in the next few years.

    “I think that we will continue to see gradual improvement, but small improvement, over a long period of time,” he said, adding that the recovery would not be a sharp return to growth, often described as a V shape recovery.

    “I think it will be between the V and the L, if you ask me. I think it will be more of a gradual, slanted U,” he said.

    (For summit blog:

    (For more on Reuters Global Technology Summit, see [nLI040240])

    (Reporting by Sinead Carew, Ritsuko Ando and Gabriel Madway editing by Tiffany Wu and Carol Bishopric) For Reuters MediaFile blog see Keywords: TECH SUMMIT/AT&T

    C Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN19419225

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