AT&T chief: Industry moving toward usage-based pricing

AT&T CEO Randall Stephenson said he thinks the wireless industry is going to adopt usage-based pricing models for mobile data. While he did not provide specific plans for how AT&T Mobility might implement such pricing structures, he said there is a steady move toward those models.

AT&T CEO Randall Stephenson"For the industry, we'll progressively move towards more of what I call variable pricing so the heavy (use) consumers will pay more than the lower consumers," he said at an analyst conference Tuesday. His comments echo those recently made by AT&T Mobility CEO Ralph de la Vega, who hinted at still-unspecified "incentives" to get subscribers to use less mobile data.

Indeed, Verizon too has mentioned similar intentions. In January, Verizon Communications CTO Richard Lynch hinted that when Verizon Wireless launches its LTE network later this year, it will introduce a usage-based pricing model, charging customers by how much bandwidth they use.

In a wide-ranging presentation at a Morgan Stanley conference, Stephenson also touched on AT&T's relationship with Apple. The executive said the Apple iPhone will be "an important part" of the carrier's handset portfolio "for quite some period of time." He did not elaborate on how AT&T's exclusive rights to carry the iPhone might change though. Stephenson's comments are noteworthy in light of rumors that Apple will team with Verizon Wireless on its next iPhone--though that speculation has been dampened by Apple's reliance on AT&T for its forthcoming iPad.

AT&T has been criticized for not adequately preparing its network for the deluge of data traffic generated by the iPhone and other smartphones. However, Stephenson said he is pleased with the progress the company has made to improve its network, which includes switching 3G to 850 MHz spectrum in some markets.

"We're hitting our metrics," he said. "I feel really good about our path."

In its recent earnings call, Apple said it too is pleased with the plans AT&T has drawn up to improve its network. Apple's iPad with AT&T service is set to debut in April; plans will go for $14.99 per month for 250 MB and an unlimited data plan for $29.99 per month. The services will be prepaid, allowing users to cancel at any time, and will include access to AT&T's WiFi network.

Stephenson predicted iPad users would largely rely on WiFi and not AT&T's cellular network. "We think it's going to be a largely WiFi-driven product," he said. AT&T has around 20,000 WiFi hotspots across the country.

AT&T is moving ahead with its plans to deploy an LTE network, about a year behind rival Verizon Wireless. AT&T, which recently selected Alcatel-Lucent and Ericsson as its primary LTE vendors, will begin LTE trials this year with wider deployments in 2011. Stephenson said AT&T is "not in a tremendous hurry" with LTE, and he said he does not see a strong LTE product portfolio until 2012.  

On the regulatory front, the chief executive appeared to relax AT&T's stance toward the FCC's plan to impose new net neutrality regulations. "I'm actually fairly optimistic net neutrality will land at a reasonable place," Stephenson said. AT&T has been a fierce opponent of the new regulations, which would apply to both wireless and wired broadband networks.

However, Stephenson questioned the FCC's goal of bringing 100 Mbps Internet speeds to U.S. consumers.

"If the objectives are 100-megabits capability to every home in the United States, that is going to require a lot of investment," he said. "To drive that kind of investment will require a redirecting of the subsidies that exist today."

For more:
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article
- see this MarketWatch article

Related Articles:
Is usage-based pricing inevitable?
AT&T nears record with 2.7M net adds in Q4
Apple unveils tablet, dubbed iPad, starting at $500
AT&T hasn't decided yet on tiered data pricing
AT&T chief addresses network problems in NYC, San Fran
AT&T CTO defends mobile broadband network