ATandT to Require New Smartphone Owners to Purchase Data Plan

 
 
By Michelle Maisto  |  Posted 2009-08-24
 
 
 

Come Sept. 6, all AT&T subscribers who activate a new smartphone or upgrade to one will also have to purchase a data plan, according to the Boy Genius Report, which says it acquired an internal AT&T e-mail describing the change.

Existing smartphone customers will be exempt from the requirement, states the quoted e-mail.

Why the change?

"A predictable bill is a key factor in customer satisfaction. ... Data plans let customers fully utilize their device, without the worry of bill shock," states the e-mail.

Ken Hyers, a senior analyst with Technology Business Research, says he hasn't seen any studies on this point but can relate to the sentiment. "There are any number of instances in which kids send a gazillion text and IM messages and give their parents heart attacks when the bill, for thousands of dollars, comes at the end of the month," Hyers told eWEEK.

That said, "I tend to think it's less about avoiding sticker shock and more about getting them to sign up for the higher-end data plan," Hyers said.

"Operators tend to subsidize smartphones heavily and want to be guaranteed they recoup those subsidizes, and make a profit, by having customers sign up for the data plan. And AT&T, with the iPhone, has had good success in making customers buy the $30 data plans when they buy the iPhone."

U.K.-based analyst Neil Mawston, with Strategy Analytics, adds that "postpaid consumers in most regions worldwide are warming to flat-rate cell phone bills, to make costs more predictable and to avoid unexpected spikes in their bills. The move by AT&T to push new smartphone users onto an unlimited data plan for $30 a month will benefit heavy Internet users, but occasional or light Internet users may find the price tag a little high."

Indeed, a May survey from J.D. Power and Associates on consumer satisfaction with mobile phones found money to be a driver in the decision between owning a traditional mobile phone, or feature phone, and a smartphone. While smartphone sales are increasing, feature phones still constitute 72 percent of the market.

"Many owners of traditional handsets do not believe that the service cost associated with owning a smartphone is justified, as they indicated that they would not take full advantage of the advanced features," wrote Kirk Parsons, senior director of wireless services at J.D. Power and Associates, in a report.

For similarly minded AT&T customers, a sales representative will step in to offer assistance. "When a customer does not want a data plan, we will position other devices in our industry-leading portfolio for the customer to choose from, as many devices do not require a data plan," states the e-mail Boy Genius says it has acquired.

AT&T will be getting busy, in the meantime, acquainting its sales teams with the facts of the new requirement and "how to position the smartphone data requirement to customers," says the e-mail.

TBR's Hyers says he's glad the plan isn't retroactive to all customers. "Customers are aware of the charges before they sign a contract, and if they don't like it, they can always go to another carrier," he said.

Unless, that is, other carriers start to do the same. "And if AT&T is successful with this new plan, then the other operators will almost certainly do the same thing," said Hyers.


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