AT&T increases pricing, usage thresholds on smartphone data plans

AT&T Mobility (NYSE:T) said it will increase both the pricing as well as the usage caps for its smartphone customers, the first major changes the company has made to its smartphone data plans since switching to usage-based data pricing in June 2010.

AT&T said starting Jan. 22 its pricing will change, but that existing customers can keep their current pricing or switch to the new plans. The new smartphone pricing breaks down as follows:

  • AT&T DataPlus 300 MB: $20 for 300 MB (up from $15 for 200 MB)
  • AT&T DataPro 3GB: $30 for 3 GB (up from $25 for 2 GB)
  • AT&T DataPro 5 GB: $50 for 5 GB, with mobile hotspot/tethering support (up from $45 for 4 GB for a data plan plus tethering)

The carrier said smartphone customers on the 300 MB plan can add an extra 300 MB of data for $20, and those on the 3 GB and 5 GB plans can pay $10 for an additional 1 GB of data. Additionally, tablet customers can choose between the $30 for 3 GB and $50 for 5 GB plans (though the current $15 for 250 MB plan for tablet customers will remain available).

The changes come as AT&T is experiencing record smartphone activations. AT&T said in early December it sold more than 6 million smartphones in the first two months of the fourth quarter and was selling new smartphones at a rate of 100,000 per day. AT&T CFO John Stephens said at the time at an investor conference that the company will easily surpass its previous quarterly smartphone sales record of 6.1 million, which occurred in the third quarter of 2010.

The changes also put AT&T closer to the smartphone data pricing of rival Verizon Wireless (NYSE:VZ), which charges $30 for 2 GB, $50 for 5 GB and $80 for 10 GB. Under a just-ended promotion for LTE smartphone customers, Verizon was doubling the data allotments of customers in a bid to get more traffic off its EV-DO data network and onto its LTE network. Verizon executives have also talked about how, as average smartphone data usage increases, more and more customers will fall into the higher-priced usage tiers.

Analysts said the new plans could allow AT&T to increase average revenue per user, but also come with some potential downsides. "According to AT&T, the change reflects the increased consumption by consumers with their smartphones and tablets. In other words, we need more data," NPD Group analyst Eddie Hold wrote in a company blog post. "If the argument holds true, then the pricing is a benefit, with the new plans offering cheaper pricing per GB. But on the downside, if we don't need more data, then the new plans make the jump into smartphones just that bit more expensive, especially with the lack of those often talked about family data plans still conspicuously absent."

Hold also wrote that the new plans create a higher barrier to entry for tablet customers, which may make customers even more reluctant to sign up for cellualr data plans for tablets. (AT&T has said it intends to introduce multi-devcie data plans but has not said when it will do so.)

Analysts with Jefferies & Co wrote in a recent research note that AT&T recently noted that customers were using Wi-Fi to avoid moving up to higher tier plans. "There is no change on Wi-Fi usage, which continues to not be counted against the data plan limits," analysts Thomas Seitz and Kunal Madhukar wrote. "However, the new price plans with higher data limits, in our view, will encourage customers to increase their usage on the wireless network thus allowing AT&T to monetize usage that was previously lost to Wi-Fi."

For more:
- see this release
- see this CNET article
- see this The Verge article
- see this NPD Group blog post

Related Articles:
AT&T: We are selling 100,000 smartphones per day
Verizon's Shammo: LTE promotion frees EV-DO space for iPhone
Verizon to double LTE smartphone data allotments

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