AT&T Stays Mum on Tiered Mobile Data Pricing

As AT&T Inc. (NYSE: T) reported first-quarter results today, CFO Rick Lindner didn't quite reveal AT&T's current thinking on moving to a more tiered pricing scheme.

He certainly leaned in that direction, though, laying out the industry's arguments in favor of tiered pricing for mobile data usage and listing several factors that could eventually force mobile operators to change how they charge customers.

"In wireless, you're dealing with some real limitations, from a technology standpoint and spectrum standpoint, on capacity," Lindner said on this morning's conference call with analysts. "When you look at the customer base, even customers using similar devices, there's a huge disparity in the amount of data they use and the amount of capacity they consume.

"[All that] will influence how, in the future, mobile pricing will develop," he said. "It will, I suspect, evolve... as applications and devices continue to evolve and data traffic continues to grow."

But while Lindner's comments suggest AT&T is mulling mobile data pricing strategies, the operator is keeping tight-lipped on any plans it may have

AT&T took a lot of flak recently when executives raised the specter of tiered pricing for mobile broadband, particularly for iPhone users. (See There's a Hole in My Data Bucket and WiMax Moves & Mobile Bandwidth Caps.)

Wireless data spurs growth
Getting the right data pricing strategy is important because wireless, and wireless data specifically, is a big growth driver for AT&T.

Wireless service revenues were up 10.3 percent to $12.8 billion in the first quarter, compared with the same period last year. The operator's wireless data revenues in the first quarter were up 29.8 percent to $4.1 billion. The operator notes that wireless data revenues -- which come from messaging, Internet access, access to applications, and related services -- have nearly doubled during the past two years.

AT&T added 1.9 million wireless customers in the first quarter, bringing its customer base to 87 million.

As a whole, AT&T reported first-quarter revenues of $30.6 billion, up 0.3 percent compared with the same quarter last year. Net income in the first quarter was $2.5 billion, or 42 cents per diluted share, down from $3.1 billion, or 53 cents per share. AT&T's profit fell because of a healthcare tax-related charge of $995 million. Without that charge, first-quarter earnings would be $3.5 billion, or 59 cents per diluted share.

3G getting better in NY
AT&T also provided an update on the 3G network quality upgrades that have been going on in New York City. The operator said that in the first quarter, 3G dropped calls were down 6 percent in Manhattan and 9 percent in the New York metropolitan area. AT&T said that it has added a third carrier to boost capacity in Midtown and downtown in the city.

AT&T also continued its 3G network upgrade to 7.2 Mbit/s. AT&T says that where there is 7.2-Mbit/s coverage and fiber-based backhaul is in place, there is a 32 percent to 47 percent increase in data download speeds.

Update on U-verse
AT&T added 231,000 U-verse TV subscribers in the quarter to reach 2.3 million in total. Also, more than three fourths of U-verse TV subscribers have either a triple-play service option (video, voice, and data), or a package that adds wireless to those three. AT&T's total video subscribers, combining U-verse and bundled satellite customers, totaled 4.4 million at the end of the quarter.

— Michelle Donegan, European Editor, Light Reading Mobile