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Rumor Mill: AT&T to kill two-year contracts for tablets

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AT&T Mobility (NYSE:T) is doing away with subsidized tablets and the two-year contracts that go with them, according to internal documents posted by the blog Engadget.

The documents state that as of Aug. 19, customers will no longer have the option of or purchasing a two-year contract for tablets. Typically, such contracts knocked around $100 or more off the price of a tablet. However, the most popular AT&T tablet--Apple's (NASDAQ:AAPL) iPad--has always been sold with no-commitment data plans. AT&T also sells the HTC JetStream, Pantech Element and Samsung GalaxyTab 8.9 tablets.

AT&T spokesman Mark Siegel declined to comment.

Engadget also reported via the documents that AT&T will be offering 250 MB for $15, 3 GB for $30 and 5 GB for $50 under the new no-commitment tablet data plans. Additionally, starting Aug. 23, AT&T will offer its Mobile Share shared data plans, which require at least one smartphone; tablets can be added to the shared plans for $10 per month.

Two-year contracts for tablet data plans have been one of the major hindrances to the adoption of tablets with cellular connectivity. AT&T and Verizon Wireless (NYSE:VZ) hope to reverse that trend with their shared data plans (Verizon also charges $10 per month to add a tablet to its Share Everything plans). However, there is much debate over how much shared data plans will actually do to help cellular-enabled tablet sales in the months and years ahead.

According to a recent Strategy Analytics report, in 2012 there will be 24 million tablets with active mobile data subscriptions around the world, making up 12.5 percent of the total tablet installed base of 192 million. By the end of 2017, Strategy Analytics predicts the 24 million figure will skyrocket to 172 million. Strategy Analytics analyst Susan Welsh de Grimaldo said at the end of 2016, tablets with active cellular data subscriptions will represent 18 percent of the total installed base. The research firm does not yet have an estimation for what the percentage will be at the end of 2017, she said.

That report contrasts with a recent CCS Insight report, which found that that 48 percent of tablet shipments in 2011 were cellular-enabled, much higher than the percentage measured by Strategy Analytics. CCS Insight expects the share of cellular-enabled tablets will slowly diminish to 37 percent in 2016.

For more:
- see this Engadget post

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