Will be the overages. While I'm sure that the 1% of users that used north of 5GB of data on an unlimited plan are going to cry foul and AT&T will say "don't let the door hit you on the way out, thanks for the ETF", I'll also venture to guess that the majority of users are more afraid of going over the limits, and the extortionate overages that can very easily occur. Sure, "most users" can probably get by with 200MB or less per month, but how will users know how much data they've used? is there an app for that?
I think that AT&T could do well by using one of these two compromises:
1.) 200MB of 3G coverage, EDGE after that. If you wanna saturate the line at a whopping 5KBytes/sec, go for it. If you want more 3G, call and add it for that month.
1b.) have an EDGE-only tiers with double the transfer cap.
2.) Instead of rote overages, bump to the next tier automatically for that month, or give the customer the option to disable data once the limit has been reached.
And the in general thing that should be added regardless: Have the customer specify a maximum price they're willing to pay in a given month, with the option to have the bill continue to climb at the explicit permission of the account holder. $20-$30 in overages is one thing. These $7,000 cellular bills that have been discussed on ZDNet and elsewhere are quite another.
AT&T can make this work for as long as they can slightly bleed customers, but if people start getting huge bills due to data, they'll start to question whether the data is really worth the price they're paying.
Joey
AT&T overhauled its data plan pricing and put an end to unlimited plans, but the success or failure of such a move will depend on whether competitors like Verizon Wireless follow.
The hubbub over the pricing changes is fierce. First, there’s the squawking about the end of unlimited data plans (even though AT&T is grandfathering in current users on those models). Then there’s the tethering that is finally coming to the Apple iPhone. And then there’s the usual moaning and groaning.
In a nutshell, AT&T now has a $15 data plan at for 200 MB of data; a $25 plan for 2 GB of data; and tethering for an additional $20 a month.
Analysts are already handicapping the fallout from AT&T’s move, but one big question mark revolves around Verizon Wireless. Verizon could match AT&T’s plan and include caps too. Or Verizon could use AT&T’s plan as a marketing hammer and court heavy data users to its network.
Barclay Capital analyst James Ratcliffe said in a research note:
Key will be competitive response, if other carriers (especially Verizon) use new plan as marketing tool or follow with similar moves. If Verizon doesn’t follow, it could create significant adverse selection problem for Verizon - customers who know they’re very high users could migrate to Verizon.
Simply put, heavy users going to Verizon will tax its network so maybe it has to match AT&T’s move. Does any carrier really want data hogs?
Other analysts note that Verizon is likely to follow AT&T’s lead. Oppenheimer analyst Timothy Horan said:
Tiered smartphone data pricing is positive for the entire communications industry, as data usage will continue to grow, which will provide more consistent and visible long-term revenue growth. We expect VZ and others to implement similar plans. There should be little impact on ARPUs and revenues. While we have been waiting for this move for a while, we are not sure what drove the specific timing other than probably very high-end iPad and iPhone users continuing to pressure AT&T’s network and the need to get ahead of the new iPhone with tethering capabilities.
And that brings us to a few other comments about AT&T’s pricing moves. The caps on data usage could alleviate AT&T’s network strain while encouraging more subscribers to use higher-priced plans.
Macquarie analyst Phil Cusick said:
We see three impacts over time: 1) some reduction in data ARPU per sub or at least slower growth near term, but 2) higher long-term penetration of data, and 3) more ability to monetize customer usage and less risk on the network from abusers.
Indeed, there could be real returns in moving to a tiered data model. If that’s the case, AT&T’s data pricing plan overhaul is likely to be just the first volley.
