Can Unlimited Data Survive the Trial of Tiers?

I was struck by a data disconnect as I listened to AT&T Inc. (NYSE: T) CFO John Stephens on the operator's earnings call Tuesday morning.

The company is barely adding any more subscribers than it did last year at this time and fewer monthly customers: On Tuesday it announced that it had added 1.2 million new customers with 320,000 on monthly contracts, compared to 1.1 million with 331,000 on monthly contracts in the second quarter.

Yet, the operator's wireless revenue continues to grow 4.8 percent year-on-year to $16.4 billion in the second quarter. Wireless data revenues increased by $1 billion or 18.8 percent in the same time period.

One contributing factor could turn out to be the popularity of AT&T's tiered data plans. "We've gone from to zero to 27 million in two years," Stephens commented on user take-up.

Customers, he says, are actually choosing the larger 3GB and 5GB plans for their smartphones, Stedphens says. Of course, it makes no sense to pay $20 for 300MB -- an $20 extra when you bust that cap -- when $30 gets you 3GB anyway.

Nonetheless, it will be interesting to see if these results have any affect on how Wall Street thinks of Sprint Corp. (NYSE: S)'s continued commitment to unlimited data on smartphones in the future.

After all, AT&T's results don't suggest that a massive flight to Sprint's unlimited plans is taking place, even though people will generally say they prefer unlimited options when asked.

Meanwhile, AT&T is continuing to increase revenues even with relatively flat subs growth, something investors are bound to like.

So, what if unlimited isn't as big a selling point as Sprint promotes it as? The operator has already shown that it can cap tablets and laptops that it worries will put a serious burn on its data network.

So is there a point when the lure of lucre from tiered and shared plans could tempt Sprint away from unlimited?

— Dan Jones, Site Editor, Light Reading Mobile

davidhoffman 12/5/2012 | 5:26:39 PM
re: Can Unlimited Data Survive the Trial of Tiers?

Sprint mobile wireless has a much smaller geographic coverage area than AT&T or Verizon mobile wireless do.  For many mobile users a very large geographic coverage area is extremely important.  Sprint's unlimited data plan is partially funded by diverting money that would go into geographic expansion to pay for the data its subscribers use.

Flook 12/5/2012 | 5:26:32 PM
re: Can Unlimited Data Survive the Trial of Tiers?

Personally speaking, as long as I have good service in a metro area, I'm not really all that concerned if I'll have coverage the few times I'm in the boondocks. Having said that, if Sprint offers good service in the populated areas, I think the unlimited plan will prove to be a winner for Sprint.

But a lot will depend on Sprint's marketing...




joset01 12/5/2012 | 5:26:31 PM
re: Can Unlimited Data Survive the Trial of Tiers?

Wait David,

Are you saying that AT&T couldn't afford to provide unlimited data plans to all if it wanted to?

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