AT&T (T) Ends Unlimited-Data Plans
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Price: $325.89 -0.56%
Overall Analyst Rating:
SELL (= Flat)
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EPS Growth %: +20.4%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
EPS Growth %: +20.4%
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To address the massive strain that the Apple Inc. (NASDAQ: AAPL) iPhones and iPads, along with other smart phones place on its network, AT&T Inc. (NYSE: T) unveiled a plan to control the data usage that customers consume with the devices.
As the only U.S. carrier of the Apple wireless devices, AT&T is introducing two new data plans that will take effect June 7, which will seek to limit data consumption. The new structure will replace the $30 unlimited data usage plan that is required for all smart phone plans on the AT&T network.
Going forward, customers with AT&T will choose from two plans, with the first being 2 gigabytes for $25 per month and an additional $10 for each additional gigabyte. The company said that 98 percent of smart phone users will not need more than the 2 GB in a given month.
A second plan will offer those who do not use as much data, a $15 per month plan that will provide users with 200 megabytes, but going over will cost customers an additional $15 per month to double the data.
"Customers are getting a good deal, and if they can understand their usage, they can save some money," Ralph de la Vega, the head of AT&T's consumer business, said.
With the cheapest plan, a smart phone from AT&T would cost as little as $55 per month before taxes and add-ons, compared to the current lowest rate of $70 per month, a fact that de la Vega said will open up the smart phone market to more consumers.
This new plan structure may cause issues for consumers, as many have limited knowledge of how much usage a gigabyte can get them. A single gigabyte is enough to send hundreds of e-mails and open a dearth of Web pages, but watching video or video conferencing can cut into month allotments at a rapid pace.
David Dixon of FBR Capital Markets sees this move was expected, and it will not be a shock to see Verizon Communications Inc. (NYSE: VZ) to quickly follow suit along with all other major wireless providers.
Dixon said: "In our view this new pricing initiative is an important first step toward a profitable long term wireless data pricing model. Furthermore, following the implementation of this ‘consumer friendly’ first step, we anticipate further pricing action from AT&T to address high usage customers which are creating adverse network challenges. In the event that the embedded user base does not migrate to the new pricing plans, we would expect AT&T to increase efforts to migrate its customer base in future."
Shares of AT&T are up 20 cents to $24.53 in midday market movement, while share of Apple are up $1.84 to $262.72.
As the only U.S. carrier of the Apple wireless devices, AT&T is introducing two new data plans that will take effect June 7, which will seek to limit data consumption. The new structure will replace the $30 unlimited data usage plan that is required for all smart phone plans on the AT&T network.
Going forward, customers with AT&T will choose from two plans, with the first being 2 gigabytes for $25 per month and an additional $10 for each additional gigabyte. The company said that 98 percent of smart phone users will not need more than the 2 GB in a given month.
A second plan will offer those who do not use as much data, a $15 per month plan that will provide users with 200 megabytes, but going over will cost customers an additional $15 per month to double the data.
"Customers are getting a good deal, and if they can understand their usage, they can save some money," Ralph de la Vega, the head of AT&T's consumer business, said.
With the cheapest plan, a smart phone from AT&T would cost as little as $55 per month before taxes and add-ons, compared to the current lowest rate of $70 per month, a fact that de la Vega said will open up the smart phone market to more consumers.
This new plan structure may cause issues for consumers, as many have limited knowledge of how much usage a gigabyte can get them. A single gigabyte is enough to send hundreds of e-mails and open a dearth of Web pages, but watching video or video conferencing can cut into month allotments at a rapid pace.
David Dixon of FBR Capital Markets sees this move was expected, and it will not be a shock to see Verizon Communications Inc. (NYSE: VZ) to quickly follow suit along with all other major wireless providers.
Dixon said: "In our view this new pricing initiative is an important first step toward a profitable long term wireless data pricing model. Furthermore, following the implementation of this ‘consumer friendly’ first step, we anticipate further pricing action from AT&T to address high usage customers which are creating adverse network challenges. In the event that the embedded user base does not migrate to the new pricing plans, we would expect AT&T to increase efforts to migrate its customer base in future."
Shares of AT&T are up 20 cents to $24.53 in midday market movement, while share of Apple are up $1.84 to $262.72.
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