Tablet Prep: AT&T & Verizon Shake Up Pricing

Both AT&T Inc. (NYSE: T) and Verizon Wireless are shaking up their pricing structures in preparation for a new rash of tablets on their network, including competing iPad 2s. AT&T added a post-paid billing option for tablets, while Verizon set a deadline of this summer for its move to tiered pricing. (See AT&T & Verizon Fight for iPad 2 Dominance.)

AT&T previously sold tablets only on a pre-paid basis, but customers will now have a choice between pre- and post-paid plans, which are tacked on to their existing monthly wireless bills. If they choose post-paid, they can choose $15 for 250MB or $25 for 2GB, plus $10 per 1 GB of overage, but the plans are still contract-free. For pre-paid, the prices and limits are the same, but those who go over on the 2GB plan may choose to purchase an additional 2GB for $25.

Verizon will soon join AT&T in tiered pricing, it confirmed just a month after it began selling the iPhone 4. Chief Financial Officer Fran Shammo, speaking at a Morgan Stanley tech conference Wednesday, said Verizon will make its long-awaited move to tiered pricing in June, around the time it plans to have many more Long Term Evolution (LTE) devices on the market.

Why this matters
The move to tiered pricing is promoted as a way to increase simplicity for consumers. While bundling it with the wireless bill certainly does that, tiered plans are also more lucrative for the carriers. AT&T Mobility CEO Ralph de la Vega told investors at the conference Wednesday that it has 10 million subscribers on its usage-based plans, up from 7 million in December, so demand is continuing to grow as well.

Verizon hasn't stated how it will cap its plans – whether based on usage or speed, but it will have to do so carefully to avoid consumer backlash. How consumers react depends largely on if they are light or heavy data users, but -- as with AT&T -- there are sure to be grumbles when Verizon first makes its move.

Either way, most see the move to tiered pricing as inevitable as wireless revenues shrink and subscribers migrate to data-driven 4G networks. (See Mobile Data's Doomsday Scenario.)

For more
This isn't the first time the operators have changed up their pricing structures. Check out the following stories for the changes they've made recently.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:11:17 PM
re: Tablet Prep: AT&T & Verizon Shake Up Pricing

How consumers react to tiered pricing is partly driven by what happens to them after they go over the cap - are they charged? Slowed down? Blocked from certain apps? Policy vendors have lots of creative suggestions. I wonder if Verizon will implement one of them versus going with straight charges.

jdbower 12/5/2012 | 5:11:12 PM
re: Tablet Prep: AT&T & Verizon Shake Up Pricing

I would also argue it also depends on if there is a cap.  Verizon's current tiered pricing model includes an unlimited tier, but their entry level tier is so small (150MB) that it doesn't cover even a casual smartphone user.  I see no reason why future tiered pricing models automatically preclude unlimited access - seems like that would satisfy the power user while lowering the cost of entry for moderate users at the same time.

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