AT&T Mobility CFO: Cheaper iPhone helps us compete

AT&T Mobility's (NYSE:T) decision to reduce the price of its iPhone 3GS to $50 ahead of Verizon Wireless' (NYSE:VZ) launch of the Apple (NASDAQ:AAPL) iPhone 4 helped the company compete in a non-exclusive iPhone environment and stimulated more demand for smartphones, according to AT&T Mobility CFO Pete Ritcher. 

Speaking at a Deutsche Bank Securities Media and Telecom conference, Ritcher also said the company expects Verizon's launch of the iPhone 4 to affect AT&T's first quarter gross adds and deactivations. "I think we will see an impact in both areas," Ritcher said. "The two areas are inter-related."

He added that AT&T has taken a number of steps to prepare for this loss of iPhone exclusivity. "We also have done marketing in terms of communicating the benefits of the devices and all the smartphones on our network." Ritcher also said the company ramped up its advertising in the first quarter, and has been more aggressive with its promotions to help combat the competition.

Regarding smartphone growth, Ritcher said approximately 40 percent of the company's wireless subscribers now use smartphones, and that the explosion in smartphone adoption is increasing the company's average revenue per user because smartphones come with a required, tiered data plan--either $15 per month for 200 MB of data or $25 per month for 2 GB of data.

Earlier this month, AT&T Mobility and Consumer Markets CEO Ralph de la Vega said the company now counts 10 million customers on its tiered data plans. He said the figure is notable as customers on AT&T's tiered pricing structure offer a "better yield" in terms of per-megabyte transmission costs than those on unlimited plans.

Meanwhile, competitor Verizon Wireless is expected to unveil tiered mobile data pricing plans this summer. However, the company is still figuring out what exactly those pricing plans will entail. Verizon Communications CFO Fran Shammo told investors at the Morgan Stanley Technology, Media and Telecom conference earlier this month that the upcoming tiered pricing plans could be based upon consumption or speed differentiation, or both. "We are still working on the models," he said.

Ritcher declined to talk about AT&T's future data pricing--AT&T could introduce new pricing when it launches LTE service later this year; however, he said the company is pleased with its current tiered pricing structure. Ritcher stopped short of saying that AT&T's tiered pricing structure has helped stimulate demand--but he said the company believes that having a low-end data plan has helped with penetration.

For more:
- see this replay of the webcast

Related Articles:
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Verizon CFO: We will move to tiered data pricing mid-summer
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AT&T, undeterred by Verizon, adds 4.1M iPhones in Q4
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