AT&T’s Data Price Shift and the Effect on the Digital Marketplace

On June 2, 2010, AT&T announced a new pricing model for its data plans. The $30 per month unlimited data plan is no longer available unless you are a legacy user. AT&T purports that its new two-tier pricing model makes smartphone Internet access more affordable for more people. The first tier provides 200 megabytes of data for $15 per month. The second tier provides 2 gigabytes of data, ten times the amount of the first tier, for $25 per month. AT&T reassures customers that they will have unlimited access to over 20,000 AT&T Wi-Fi hotspots along with unlimited access to Wi-Fi hotspots in the home, office, or elsewhere. Also, for an extra $20 per month, top tier users get the ability to tether their smartphones to their computers. To keep customers informed on data usage, text updates are sent to a user when customers reach 65%, 90%, and 100% of their monthly allotment.

How are consumers and companies going to respond to this shift? That is the question being asked all across the country, and AT&T is asking the very same thing. Spencer Ante of the Wall Street Journal reports that mobile-device software developers are worried that customers are going to think twice before buying more apps. If customers do not know their current data usage, they could be worried about future overage fees. All of this worry could be a good thing though. If customers are more aware on their data usage and developers are increasing the efficiency of their applications, the networks should run more efficiently. BlackBerry maker Research In Motion has put a premium on efficient use of networks. A February Consumer Reports study points out that iPhone users consume an average of 273 megabytes per month while BlackBerry users only consume an average of 54 megabytes per month.

From the developer side, the mobile music-streaming monster Pandora already has efficiency on the brain. Founder Tim Westergren said that Pandora does not consume much data, and they have been working on efficiency for years. Plus, he says that less than .5% of Pandora users would feel any constraint under the 2 gigabyte option. This second statement is not even too bold. AT&T reports that 65% of its users consume less than 200 megabytes per month, while 98% of AT&T users consume less than 2 gigabytes per month.

Those numbers seem great for now, but what about the future? With the recent release of a 4th generation iPhone that includes video chat capabilityy, and with smartphone usage increasing, the demand on data networks is destined to rise. Already 23% of mobile consumers have a smartphone. This is up from 16% early last year. With a tug-of-war between consumer fear and an ever-increasing burden on data networks, the best thing to do is to ease customer expectations by promoting more efficient mobile applications. This strategy allows developers to play into current consumer fear while preparing for the future. Efficiency is a great current marketing tool, and a more efficient app would presumably run more smoothly on a possibly strained future data network.