AT&T to Quadruple Some Data Plan Fees

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NEW YORK -- AT&T is following bigger rival Verizon Wireless with a new type of family plan that comes with a four-fold increase in its fees for data services such as mobile Internet.

But, unlike its rival, AT&T (T) says the plan will be an option rather than a requirement for new customers and subscribers upgrading to a new phone.

Late in August, AT&T, the No. 2 U.S. mobile provider, will launch the new offering, which allows its customers to buy a single data plan for up to 10 devices and includes unlimited phone calls and text messages.

Under the plan, the company's data price could be quadruple its current fee. For example it will charge $40 for 1 gigabyte of data per month, compared with its current rate of $30 for 3 gigabytes.

The hope is that the new plan, similar to one kicked off by Verizon Wireless (VZ) in June, will entice individuals and families to connect more devices such as tablet computers to the AT&T network because they will no longer have to buy a separate monthly data allowance for each mobile device.

Since young consumers are making fewer phone calls in favor of communicating via data services, AT&T, like Verizon Wireless, is overhauling its pricing in a bid to boost revenue from data services and to avoid a future decline in voice revenue.

Pivotal Research analyst Steve Sweeney expects the plans to increase overall revenue over the long term though it may reduces average revenue per customer slightly in the short term.

"AT&T and Verizon are both changing their pricing structures to maximize their long-term revenue growth based on where the highest growth in demand will be coming from," Sweeney said, referring to growing demand for data services.

And AT&T's move to offer the new plan as an additional choice could work in its favor, Sweeney said.

"You really can't alienate people by giving them another option," he said. "AT&T's approach is a little smarter."

Buying in Bulk

AT&T hopes the new plan leads people to buy data in bulk because the bigger the data plan, the cheaper the per gigabyte rate. A customer who wants 20 gigabytes of data, would pay $200 every month, or $10 per gigabyte - level with is current $30 plan.

"We think there's really great flexibility for these plans," David Christopher, AT&T's chief marketing officer for mobile told Reuters.

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For example, he said a customer could use more data on their tablet one month and switch their heaviest usage to their smartphone the next month without adjusting their plan.

Or if some family members tend to use less data than others, the heavier users would be less likely to go over their limit and incur hefty overage fees under the new plan.

But if the higher price for each gigabyte of data is off-putting for some consumers, there is one key difference between AT&T and Verizon Wireless. AT&T will keep offering its existing plans whereas Verizon Wireless offers no choice to new customers and customers upgrading to a subsidized phone.

"If shared data is not for you then we'd love for you to stay on our existing plans. We know the existing plans make sense for lots of situations," Christopher told Reuters in what appeared to be a veiled dig at Verizon Wireless.

The executive declined to disclose the company's expectations for the impact on revenue and customer growth.

When Verizon Wireless announced its data share plan on June 12 some customers complained that they did not want unlimited phone calls or higher data fees.

Under the new plan, an AT&T customer with one smartphone would pay a $45 monthly fee for unlimited calling and texting and a $40 fee for one gigabyte of data. The voice and texting fee per smartphone drops to $40 for customers who pay $70 a month for 4 gigabytes of data.

An AT&T customer buying 20 gigabytes for $200 a month would pay $30 for voice and texting for each smartphone, leading to a total bill of $350 for a family of five.

In comparison, a Verizon Wireless customer would pay $150 for 20 gigabytes of data and $40 per smartphone, also leading to a total bill of $350 for a family of five.

Mobile Shopping Trends
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AT&T to Quadruple Some Data Plan Fees

Expect to see these gain popularity over the next 12 to 18 months. Augmented-reality apps offer consumers rich content -- be it on an item's features and benefits, or information that compares and contrasts various products to help shoppers make better on-the-spot, informed shopping decisions.

So in theory, a supermarket shopper with health issues debating between several cereal brands could tap an augmented-reality app to pull up product information and "compare this product versus three others," Fry says.

And AR apps will likely move beyond the supermarket aisle: There are whispers that Walmart (WMT) and Best Buy (BBY) will soon be launching augmented-reality apps.

These apps are one way retailers are fighting showrooming, when shoppers use brick-and-mortar stores as showrooms to check out potential purchases, only to buy later from online merchants at a lower price, Fry says.

"Information is value. Consumers aren't just buying on the basis of the lowest-possible price, he says. "Augmented reality apps will allow [retailers] to make a showroom that Amazon [for example,] will have difficulty duplicating."

Fry says augmented reality-apps offer a more sophisticated evolution what retailers have been attempting with QR codes, the black-and-white matrix bar codes that have been popping up on everything from product displays to store windows.

Lusting after a cool blouse or a sleek flatscreen TV but can't justify paying the steep price? Well, just as sites like alert travelers when airfares drop, clothing store Bebe (BEBE) and Best Buy now offer apps that will alert shoppers when an item goes on sale.

"Essentially, by using the retailer's app, a user can mark an item as a favorite and choose to be alerted when the product goes on sale, or reaches a price point specified by the user," Scott Gamble, vice president of digital solutions for AllianceData, which issues retail credit cards for stores like J. Crew and Pottery Barn, tells DailyFinance. "Specialty, electronic, and hard goods retailers would be most likely to implement this type of tool moving forward."

Alliance Data is now developing a "virtual gifting" mobile tool that it plans to launch as a pilot program later this year.

"The general idea behind this capability is that it would allow a cardholder of one [retail store] brand to send a virtual 'gift card' via a mobile device to another cardholder of the same brand," Gamble says. "The gift could be redeemed in-store via the recipient cardholder's mobile device. Women's specialty retailers will likely be among the first to launch this sort of tool."

While the jury is still out on how tablet computers will ultimately figure into the shopping experience, retailers are already starting to capitalize on tablets' advantage over smartphones, most notably, their larger screen size.

Retailers are now leveraging tablets to help consumers do more than simply make purchases; the goal now is to help people solve more complex shopping problems like how to redecorate a room or piece together a wardrobe. The right tool for those project-sized tasks: Magalogs, hybrid magazine/catalog mobile sites that offer how-to advice and rich content, Fry says. "It's about providing better context to make it easier for shoppers to purchase from these retailers," he says. The consumers can conceivably use retailers' mobile magalogs to walk them through a project in a store. They'll use their tablets to "give me ideas and tell me how to execute a project," Fry says.

Cosmetics chain Sephora, for one, announced this week the test roll out of iPads to 20 stores, where they will give shoppers another way to navigate the retailer's thousands of products and interact with the menu of services offered by its Beauty Studio.

Sephora just updated its online and mobile sites. Now, each product on is tagged and indexed with 25 different characteristics, from data like target age group, to specific ingredients, formulations, fragrance, price and more, in a bid to offer shoppers a targeted, personalized shopping experience.

Some women's apparel chains are strategically placing QR codes in their stores -- in fitting rooms, for example -- so that shoppers can sign up for store credit cards on the spot, assuming that the shopper has both a camera and a QR-code reader on their smartphone.

A shopper can scan the QR code, which connects them to the retailer's mobile-optimized website, where they're asked a few questions to apply for the store card, Gamble says. If qualified, "they would receive approval within a minute or less."

"The QR code makes the application process very quick and convenient for the customer and, upon approval, almost immediately specifies their buying power -- their credit limit -- so they can immediately take advantage of the benefits of instant discounts and rewards that typically come with the initial card purchase," he says.

The companies' next biggest rival, Sprint Nextel Corp, does not offer family plans for data, but instead offers unlimited data usage for a flat monthly fee.

Verizon Wireless is a venture of Verizon Communications and Vodafone Group.

AT&T shares closed at $35.82 on New York Stock Exchange Tuesday while Verizon shares closed at $45.66.
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