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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

Michelle Donegan 12/5/2012 | 4:38:55 PM
re: AT&T Stays Mum on Tiered Mobile Data Pricing When comes to usage-based pricing, I'm wondering if AT&T will wait to follow Verizon on this when VZW launches LTE later this year. LTE marks a new start, so to speak, so operators can introduce new charging policies.
Jeff Baumgartner 12/5/2012 | 4:38:53 PM
re: AT&T Stays Mum on Tiered Mobile Data Pricing No matter the timing, I'm guessing it will be followed by much of the same kind of hand-wringing and gnashing of teeth that the cable guys had to confront when they started to test and implement Internet usage caps and meters. It'll be a hoot! JB
Michelle Donegan 12/5/2012 | 4:38:52 PM
re: AT&T Stays Mum on Tiered Mobile Data Pricing No kidding. Personally, I like the simplicity of a flat fee for "unlmited" data. I probably pay too much for what I use, but the idea of usage-based just sounds complicated to me. Mobile operators will have to keep the plans very simple, especially for folks like me!
Jeff Baumgartner 12/5/2012 | 4:38:48 PM
re: AT&T Stays Mum on Tiered Mobile Data Pricing My service is subject to Comcast's monthly 250-GB excessive use cap, but i come nowhere near it, according to the meter they use. But I think it would be hard to judge if I had to worry about fitting into a metered tier that might charge me extra if I went above certain limites it since it's difficult to know how much bandwidht i might consume in a given month. i'd be afraid i'd overpay one month, and then blow out my cap the next. Guess they should think about offering significant buffer room between the different service tiers to avoid that possible problem. JB
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