ATandT Offers More Data for the Buck, a Possible Win-Win-Win Strategy

AT&T officials plan to offer a bit more data for the dollar, announcing that on Jan. 22 they will begin offering new smartphone and tablet data plans to new customers, or current customers who want to make the switch.
The current 200 megabytes of data for $15 a month will be swapped for 300 megabytes for $20. In addition, the current 2GB for $25 a month will be swapped for 3GB for $30 a month.
And finally, the 4GB for $45 will be replaced by 5GB for $50 a month with mobile hotspot and tethering.
New tablet plans offer 3G of data for $30 and 5GB of data for $50 a month. Smartphone customers wanting to buy additional data can pay $10 for each extra gigabyte, or those on the 300MB plan can simply double up, adding an additional 300MB for $20.
The news may strike some as initially startling-the new $20 monthly plan, for example, increases its price by 33 percent. However, its data offer grows by 50 percent, a seemingly generous move for a company that spent the last nine months bellyaching about its lack of spectrum and trying to convince the Federal Communications Commission (FCC) that allowing it to purchase T-Mobile would benefit data-devouring Americans.
“Customers are using more data than ever before,” said David Christopher, AT&T Mobility’s chief marketing officer, in a statement. “Our new plans are driven by this increasing demand in a highly competitive environment, and continue to deliver a great value to customers, especially as we continue our 4G LTE deployment.”
Ken Hyers, an analyst with Technology Business Research, seconded the notion of increasing data use and said the change could also help AT&T address an issue and brush off its image.
“Today’s always-connected smartphones with their numerous apps are constantly touching the data network and using data [and] 200MB data plans … simply don’t supply enough data for a modern smartphone, causing customers to constantly go over their monthly allotment of minutes,” Hyers told eWEEK.
“Customers who purchase 2GB plans are also going over their monthly allotment of minutes as they watch videos and stream music from services like Pandora,” he said. “By making new customers sign up for larger data plans, AT&T is ensuring that those customers are less likely to go over their data allotment, and consequently, avoid having unhappy customers who complain.”
Bringing on new subscribers with high monthly payments should also help to boost AT&T’s revenue as it does indeed race to continue deploying Long-Term Evolution (LTE), well behind competitor Verizon’s current pace.
AT&T’s failed bid for T-Mobile-which cost it about $4 billion and made it hand over some spectrum to T-Mobile in a sort of legal mea culpa-set it further behind Verizon, which finished 2011 well ahead of its proposed schedule.
“The balance of power has shifted to Verizon in the past few months,” a Frost Investment Advisors money manager told Bloomberg, according to a Jan. 16 report that suggested AT&T could consider purchasing Dish Network to assuage its spectrum pressures.
On Oct. 20, 2011, AT&T announced that it activated 2.7 million iPhones during the third quarter and added 2.1 million subscribers, bringing its total to 100 million. Still, its revenue dipped slightly from its earnings a year earlier.
Verizon, a day later, announced that it had activated 2 million iPhones during the quarter and added 1.3 million new subscribers, but that revenue, at $27.9 billion, was up 5.4 percent from the same quarter a year ago. It also sold 1.4 million LTE-enabled devices and noted that its 4G LTE network was as of October in 165 markets.
AT&T will announce the financial results of its 2011 fourth quarter Jan. 26, and Verizon will do the same Jan. 24.
With AT&T making an LTE push, said TBR’s Hyers, “new customers are likely to purchase LTE phones like the LG Nitro that AT&T just introduced, which will increase data use. So the larger data plans make sense for those new customers, and at the same time will result in a nice bump in AT&T’s data ARPU (average revenue per user).”