AT&T Axes Lower-Cost SMS Plan

AT&T Inc. (NYSE: T) is sticking with unlimited in at least one area -- SMS. The carrier confirmed Thursday it is doing away with its $10 plan for 1,000 text messages per month, giving new customers an option of unlimited texts or pay-per-text plans.

AT&T said in an email to LR Mobile that its unlimited-only options have proved to be the most popular, prompting it to ditch the lower-cost plan, a move that Engadget first leaked on Wednesday. Existing customers are grandfathered in, but starting Aug. 21 new customers will choose from $20 per month for unlimited texts, $30 per month for a family messaging plan or pay per text at $0.20 for each SMS and $0.30 per MMS.

On the pay-as-you-text plan, users will reach $20 after only 100 messages, making unlimited the most economical for even moderate texters.

Why this matters
SMS has exploded in the past, overtaking voice calls as the preferred mode of communication for many. But, consumers aren't as dependent on the carriers for SMS as they once were. There are a number of third-party chat apps that circumvent the network, and free services like BlackBerry Messenger and the soon-to-be-launched Apple Inc. (Nasdaq: AAPL) iMessage make the channel less important. (See Apple Borrows From Competitors for iOS 5.)

AT&T is also likely hoping to drive more revenue from SMS, which has been on the decline as IM services gain share. On average, each U.S. subscriber sent about 664 messages per month in the second quarter, but the percentage share of data revenues continues to decline for messaging, according to industry analyst Chetan Sharma. For more
Read more on SMS, including its security risks, costs and social-networking uses.

— Sarah Reedy, Senior Reporter, Light Reading Mobile