AT&T follows Verizon on shared data plans

As operators in mature markets take steps to move away from low margin or loss making all-you-can-eat data pricing models,US carriers are pioneering a model that enables families to draw data for each member’s personal device from a single monthly allocation. AT&T this week became the latest carrier to introduce the play.

AT&T’s plan starts at 1GB for $40, with a $45 fee for each smartphone attached to the plan. Current customers are not required to switch to the new plans, but can choose to do so without having to extend their contract. The new plans will also be available for business customers, and the operator expects the plan to become even more useful to consumers when M2M services grow in usage and popularity.

Verizon launched its shared data plan in June. It is offering customers unlimited voice calls and text messaging and a single data allowance for up to ten devices, beginning at 1 GB for $50, with an additional charge of $40 for each smartphone on the plan.

Jan Dawson, chief telecoms analyst at Ovum, said that although Verizon had the opportunity to benefit from a first mover advantage when it launched its shared data service, it made several key mistakes from which AT&T appears to have learned. He explained that AT&T is giving customers more options and a simpler charging structure.

“AT&T’s offering has almost identical pricing but some really important differences in the detail,” said Dawson. “Most importantly, AT&T isn’t forcing customers into the new plans, which is really important because they’re not the best deal for all customers. There are some subtle differences in the pricing too, but they won’t make a significant difference to most customers.”

Mike Roberts, principal analyst and head of Americas at Informa Telecoms and Media warned that, when operators introduced family plans for voice services, voice usage went up quite significantly. Operators do not want to encourage similar behaviour with data because of capacity issues.

“The art for the carriers is to sell the appeal of shared plans as being more convenient and easier to manage. The head of the household could manage the one bill and have everyone on it and keep control without having to worry about multiple bills,” explained Roberts.

Not all US operators are convinced, however, and Sprint has no plans to move to shared data pricing. Stephen Bye, CTO at Sprint, told Telecoms.com that while the cost of provision is rising faster than the revenues being derived from data, unlimited data plans are simply more convenient for the consumer. He said  convenience is the key to customer retention and, when operators start to price data based on usage, it creates a very complex situation for a customer.

“With unlimited data price plans, customers clearly do not have to worry about their data consumption. But if operators introduce usage-based price plans customers have a new set of problems to think about, such as whether a software update is counted against their plan or the extent to which background applications are running and using up their data allowance without their knowledge.”

Controversially, though, Bye suggested that unlimited data can also be more cost-effective for the operator.

“A lot of operators are focused on the network cost but one needs to look at the overall end-to-end cost: what is the service related cost, how many calls are coming in to customer care teams? So we look at the end-to-end business model and we continue to believe that unlimited is the best value proposition for our customers, it provides the best experience, and that’s something we continue to support,” he said.

And T-Mobile USA has also suggested that consumers will not benefit from the shared contract model. The firm claimed that AT&T and Verizon’s shared family plans are costly, as the operators are charging more for what consumers want by raising rates on data, while promoting unlimited talk and text, even though today many consumers use less of these services.

T-Mobile added in a statement on July 19th that shared data plans are also complicated, as individual users don’t know how much of the shared allocation of data they are using, making it difficult to stay within their limit.

“Conversely, at T-Mobile we believe that customers who pay more, should get more,” said Harry Thomas, director of product marketing at T-Mobile USA. He added that data should be worry-free, with no surprise data cap or bill shock, and also flexible and affordable.

“Rather than having to account for each device on a shared family data plan, T-Mobile customers can use their existing data plan to power multiple devices, while still saving hundreds of dollars annually.”