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AT&T wireless scraps flat-rate Internet plan

New iPhone and iPad customers: AT&T's putting an end to its all-you-can-eat Internet plans.

AT&T on Wednesday announced data plans for new smart phone customers that charge based on how much data they consume.

The move will allow users more flexibility to buy into lower-priced data plans but could spell higher costs for its small but growing base of active Internet subscribers, such as business users.

The company said that starting June 7, new customers of gadgets such as the iPhone and BlackBerry Curve (and soon Apple's 3G wireless-enabled iPad), will choose between two options:

1) A $15 monthly plan for 200 megabytes of data. If you go over that allotment, you will pay $15 for every additional 200 MB of data used.

2) Or $25 for 2 gigabytes of data. If you go over, you'll end up paying $10 for each additional gigabyte.

Existing smart phone customers can renew their unlimited $30 data plans. When asked how long a customer can keep renewing, spokesman Mark Seigel said, "I can't speculate on the future."

The plan affects new subscribers, existing customers who want to upgrade from a basic feature phone to a smart phone, and existing smart phone users who want to switch out of their flat-rate plan.

"To give more people the opportunity to experience these benefits, we're breaking free from the traditional 'one-size-fits all' pricing model and making the mobile Internet more affordable to a greater number of people," said Ralph de la Vega, president and CEO of AT&T Mobility.

Currently, 98 percent of AT&T customers use less than 2 gigabytes of data a month (that's about 16 hours of streaming video). But analysts predict users will suck up more Internet capacity as new devices -- the iPad, iPhone HD, HTC Evo -- hit the market. These tablets and phones are touted for their ability to deliver video and other data-hungry applications better than anything we've seen yet.

The new pricing for data plans is expected to be adopted by other wireless service providers who see greater revenue potential from data usage, particularly as they upgrade their networks to faster fourth-generation (4G) speeds later this year. And it should make users more aware of how much data they consume, which could alleviate congestion on wireless networks -- a problem that has beleaguered AT&T with the popularity of the iPhone, which the company carries exclusively on its network. Check out this interview I had last January with Verizon Wireless CTO Dick Lynch, where he discussed the end of flat rate plans.

Barclays Capital analyst James Ratcliffe wrote today in a note to clients that the pricing changes will "bend the curve" on how users consume Internet data on their wireless devices and that the move could prompt others to follow suit.

Because all current customers would be unaffected, AT&T would face limited backlash, Ratcliffe said. And since very few new customers are likely to hit the price cap, their bills would be lower. Other carriers may find it hard to market their plans against the cheaper AT&T options, he said.

By Cecilia Kang  |  June 2, 2010; 10:20 AM ET
Categories:  AT&T  
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Comments

It would be nice if Verizon, Sprint, and other cellular providers could help AT&T out with its iPhone user congestion. Maybe it's finally time for the government to step in and end the cellular providers phone model monopolies and allow users to purchase phones and plans from any provider. Now that would be competitive.

Posted by: dauerad | June 2, 2010 12:35 PM | Report abuse

Poor iPad users got fooled by Apple/AT&T again! It was introduced as internet rich machine, multimedia device, with $30/month unlimited plan. Now what? Couple Netflix movies - you are over 2G limit. Stream radio, watch youtube and before you know it, cash out extra $10 for each Netflix movie!

I have Sprint touch pro2, not exactly a multimedia machine, just emails, occasional internet with Opera Mini and always go 500M+/month. So being realistic, nobody with smartphone will use less than 200M. Surely, if you count dumbphone, you get 98%, but aren't we trying to get rid of those???

I really don't understand, how this change is a good thing for customers?

Posted by: selytch | June 2, 2010 2:05 PM | Report abuse

@Author:

Where do you get numbers that 2G is about 16 hours of streaming video? If your numbers are true, than video streaming rate is 34KB/sec (270Kbit/s). Netflix rates for streaming are between 500 and 3400kbps (http://blog.netflix.com/2008/11/encoding-for-streaming.html). At 3400kbps you get less than tenth of quoted time. Oh well, in few areas ATT is actually delivering high speed internet.

Posted by: selytch | June 2, 2010 2:14 PM | Report abuse

This doesn't have anything to do with tech policy.

Posted by: Bitter_Bill | June 2, 2010 2:31 PM | Report abuse

selytch:
"I really don't understand, how this change is a good thing for customers?"

Let me help. If a person gets a smartphone, and all they want as far as 'data' is to check email once or twice a day, why should that person be required to pay the same amount for "unlimited service" that the person using their phone to stream NetFlix, iTunes, etc is paying? I mean, I like to watch Hulu and movies, too. But I prefer to watch them on my TV, not my phone.

I'm a current Verizon user, and would switch to AT&T in a heartbeat if I could. I'm tired of paying Verizon for "unlimited service" that I rarely use.

Anyone notice how none of these carriers include texting in their "data" plans, yet when you get your bill all of your texts (if you are on pay-per-use) show up as "data" charges? Things that make you say hmmmmm.....or 'cha-ching', in Verizon's case.

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Posted by: luccitrade | June 2, 2010 9:19 PM | Report abuse

I have a Slingbox and sometimes stream tv over my Iphone which now I think will be problematic when I replace my current Iphone with the new Iphone expected to be coming out this month with the forward facing camera which I am sure uses streaming to do live Voice Chatting or live Video Calling.

I am sure this is the main reason AT&T is changing the rate plan and not because they want to help users.

They know everyone is who has the new Iphone will use even more data than they are currently using because the will be able to see who they are talking to while they use the phone.

I hope that Sprint and Verizon will continue to offer unlimited plans that will force AT&T to go back to having unlimited plans.

AT&T using their statistics stating what current uses mainly use are not accurate. Because when you stream video using AT&T as when you talk with AT&T, you get dropped so much that you don't continue to stream. Also, I would use my Slingbox and YouTube alot more if it did not drop the connection so frequently that my usage rate would be alot higher.

So I hate the new plan and I hate them trying to fool everyone with this BS.

Posted by: Chrisis1 | June 2, 2010 10:42 PM | Report abuse

This might turn out to be AT&T's biggest mistake. Their network already is years behind, and instead of building infrastructure to keep pace with demand they are trying to retard demand in an effort to save money on infrastructure.

As anyone who drives a car in the Washington area can attest, this is not a winning strategy. It might have worked as long as the iPhone was the only game in town and AT&T was the only carrier offering the iPhone, but the iPhone will soon become available to competitors, and Verizon already has the HTC Droid Incredible, which is superior in performance, elegance and features to the iPhone in any event.

I imagine we will soon be seeing an exodus from AT&T. This might make their network usable again, but I think it won't be very good for their business.

Posted by: FergusonFoont | June 3, 2010 9:03 AM | Report abuse

selytch:
"So being realistic, nobody with smartphone will use less than 200M."

Pretty sure statistics show that most people don't use that much. And if you need 500MB, get the $25 plan, which is still $5 less than you were paying.

Posted by: presto668 | June 3, 2010 12:31 PM | Report abuse

Chrisis1:
"I hope that Sprint and Verizon will continue to offer unlimited plans that will force AT&T to go back to having unlimited plans."

Dollars to donuts it'll be the other way around and the other carriers follow.

Posted by: presto668 | June 3, 2010 12:34 PM | Report abuse

As an electronic society we are at the cusp of deciding between two courses for data sources.

1) we can use our broadband provider for the bulk of our data. This means we stream movies on our cable, and browse using our smart phone using wifi whenever possible. That's what I do now (particularly because ATT coverage is poor).

2) we can become adapted to the 3G or 4G network, and give up our cable or DSL lines in favor of these cell-based systems. For that to happen we'd have to be able to share our 3G network with our other 'puters (which ATT won't let you do now), AND be prepared to pay for every GB of data. It will come down to pricing, coverage, and speed.

This move makes it *less* likely that anyone will give up Comcast cable for ATT 3G broadband. We'll see if other carriers see it that way.

Posted by: merleb | June 3, 2010 2:22 PM | Report abuse

Fortunately, for Blackberry users there is a great app for tracking data usage (as well as phone usage). http://cellplantracker.com/

I heard rumors that they are making an Android app too.

Posted by: mlscha | June 3, 2010 2:27 PM | Report abuse

"Let me help"

You're not helping, you're not even clear about what you're saying.

You'll note that the *prices* didn't drop, only what you get for the *same price*.

Do you understand? If you want a data plan for $5 that just lets you get a few dozen kilobytes, you can't. You have to buy a data plan for $15 that only gives you 200K. On my home internet with FIOS, I can blow through 200K in about 3-5 minutes.

Or you can get a data plan for 2M that you can blow through in about 15 minutes.

200K? 2M? I feel like we're back in 1993 with dial-up internet and paying dearly for it.

No, lets be honest, AT&T is screwing apple customers because they can. They're not even buying you dinner, first.

Posted by: Ombudsman1 | June 3, 2010 6:49 PM | Report abuse

Anyone who thinks AT&T and for that matter any carrier is here to HELP customers is fooling themselves and being very naive. These companies are here to do business, make profits and please their shareholders. This of course has nothing to do with us - the customers!!!
AT&T is analyzing usage models and play with potential revenue making scenarios which includes data usage forecasts relying on near future service growth such as video streaming, HD content, bigger files do download (e-mails, whatever) and so on. So yes, some users who really pay flat when they use only e-mails may benefit from this new pricing. But those same users eventually will be tempted also to upgrade to iPad, iPhone or other devices Apple and Google, and the rest of the fancy companies might throw at us in the near future. AT&T is counting on this shift exactly. The money will spill in because users will now pay for the full plan the buy plus the overflow (when they reach their cap) even if one consumed just 1 single byte over the cap!!! (e.g. 200M +1 byte =$30 get it???) and the "beauty of it" is that AT&T will get money for less usage. Frees up the network, less call drops but more money flowing in so virtually (with most users not knowing the reasons for their "improved experience"), all are happy...

Posted by: gedit | June 3, 2010 7:49 PM | Report abuse

I'm a Verizon user, and imagine my surprise when I heard "all you can eat" was really 5GB. So AT&T comes out with $25 for 2GB, and somehow, this is going to convince a new customer that this is better? And if you tether, this is completely a deal breaker.

On a more basic level, if the networks want to increase speed, doesn't that alone signal they expect users to eat more? So how can this pricing be spun in a positive manner by anyone besides AT&T bean counters?

Posted by: info_stuporhighway | June 3, 2010 10:14 PM | Report abuse

Presto668, dbw1:

The carrier wants to make more money. First, convincing customers to buy smartphones (which are more expensive and require higher-priced plans). Second, charging them even more. IMO, Just for checking email once a day you really do not need a smartphone.

USA is really becoming a third world telecom country - on par with Hungary (for broadband speed/price, read news) and miserably behind on mobile internet, which will get even worse, with other carriers following ATT crappy plan.

Posted by: selytch | June 5, 2010 8:46 AM | Report abuse

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