If Flat-Rate Mobile Data Plans Are So Bad, Why Do Operators Keep Launching New Ones?

from the playing-both-sides dept

On its quarterly conference call, AT&T's CFO once again talked up how the company needed to move away from flat-rate mobile data plans because its networks are being overwhelmed by traffic from a small percentage of its users. This rhetoric -- which is really just trying to warm up the market for future price increases -- comes despite figures showing that AT&T's data revenues are increasing, while its network investment is decreasing. On some level, if an operator like AT&T wants to try to force through higher prices by increased flat rates or usage-based pricing, go right ahead; we'll see just how the market reacts. But all of their talk about their poor overwhelmed networks would go down a little bit better if they wouldn't decry flat-rate plans in situations like this, while they launch cheap flat-rate unlimited plans at the same time, as AT&T has done for the iPad 3G. If AT&T's network is already taxed and cheap data plans are to blame, why launch another one on a device that's built to consume data?

Filed Under: data plans, flat rate
Companies: at&t


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  1. icon
    Derek Bredensteiner (profile), 22 Apr 2010 @ 10:03am

    On the iPad 3G

    "while they launch cheap flat-rate unlimited plans at the same time, as AT&T has done for the iPad 3G. If AT&T's network is already taxed and cheap data plans are to blame, why launch another one on a device that's built to consume data?"

    A couple of theories I've heard on this:
    (1) AT&T is convinced that iPad users will primarily use WiFi, perhaps due to the device being used frequently in the home and at the coffee shop and at the office where WiFi is readily available.
    (2) It's another device. AT&T wants to get their customers deeper into this "pay a monthly fee per device" concept. Increasing that ARPU (Average Revenue Per User), even if those new customers aren't using AT&T for their other data services yet. I'm willing to bet very few customers are using this data plan to replace any other they currently have (such as home internet or mobile internet).

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