AT&T's Pay-More Policy
News Analysis. Suddenly that $200 iPhone price cut is less compelling. |
AT&T is raising data rates for iPhone 3G compared with existing models, which over the course of the two-year contract exceeds the price cut. The current unlimited data plan costs $20 a month, but AT&T will charge iPhone 3G subscribers $30 a month—or an additional $240 over 24 months. So much for that price cut.
But, wait, there's more. Business users—and it's unclear how AT&T defines them—will pay $45 a month, or an extra $600 over current pricing, for unlimited data. Today, anybody with an iPhone can connect to business Exchange servers using IMAP for $20 a month.
AT&T's original iPhone plan, including data, started at $59.99 for 450 minutes. The new pricing applies to plans starting at $39.99 for 450 minutes. People who didn't want data a year ago paid $20 a month extra (something AT&T later changed). That $30 price means a minimum monthly plan cost of $69.99.
AT&T's iPhone 3G press release offers some perspective on why the $200 price cut. The new carrier "agreement between Apple and AT&T eliminates the revenue-sharing model under which AT&T shared a portion of monthly service revenue with Apple." As such, AT&T can offer "attractive prices to broaden the market potential and accelerate subscriber volumes."
The press release also explains how AT&T plans to gouge gain more data services revenue from iPhone 3G users:
"Currently, less than 20 percent of AT&T's postpaid subscribers have integrated devices capable of voice, Web and data applications. Based on the company's experience, average monthly revenues per iPhone subscriber are nearly double the average of the company's overall subscriber base."
Interpretation: Since more iPhone owners use the data services, AT&T will increase monthly fees and make more money from these customers. In fairness, AT&T also is recouping on diminished margins associated with the "costs of subsidized device pricing."
I suppose AT&T could justify the increase because of access to its 3G network. But that wouldn't jive with current pricing. The $30 fee, for the PDA Personal plan, applies to smart phones, not all of which use AT&T's 3G network, like BlackBerry or Palm Centro. Subscribers can also add corporate e-mail access using AT&T's Xpress Mail service for an additional $4.99 a month or, combined, for about $10 less than what iPhone 3G users will pay.
AT&T's business site offers a handy PDA data plan matrix for existing phones. The $45 iPhone 3G pricing is the same as the PDA Enterprise, which primarily is for BlackBerry users.
How does AT&T's data pricing compare to carriers offering iPhone 3G in other countries? Earlier today, a good journalist buddy in England sent a link to information on O2 pricing for existing customers. O2 offers four iPhone plans, all with unlimited data—and two where the 8GB model is free.
With an 18-month commitment, the 8GB iPhone costs £99, or about $193, with a £35 ($68) a month plan. Subscribers get 600 minutes, 500 text messages and unlimited data. The iPhone £35 plan offers more features and data capabilities than the comparably priced non-iPhone plan.
Late this afternoon, I checked Orange, Rogers and Vodafone Web sites for iPhone 3G pricing but didn't see any yet. I may blog more pricing when available.
I had considered buying an iPhone 3G, in part because of the $199 price. But I don't want to pay AT&T an extra $10 a month for data service. I pay $20 a month now for my Nokia phone, and it could be $15 a month without text messaging. I wonder how many other people will balk at $30 or $45 a month for data. For consumers, the big data bang will come from Apple's MobileMe, which will add another $7.83 per month over two years, or $12.50 for families.
Comments (12)
This has become the norm. Lure customers in with better than normal pricing. Get them hooked and then raise the price. Just like the pusher on the street.
Why do people still believe they can get a better deal than what the competition provides? The consumer is so weak. He has all the power but no fortitude to wield it.
Posted by Bill Brock | June 11, 2008 7:57 AM
I have long been an ATT hater.
Their ethics and fair play are non existant.
Their motto is screw the customer as much as you can, then screw them some more.
I used to be their customer, but left them long time ago and very happy that I did, and will never ever go back to them.
I hope they will go bankrupt, because I hate them with all my heart.
My curse on you, ATT.
You suck.
Posted by ATT Hater | June 11, 2008 10:00 AM
20 bucks to 30 ahhhhhhhhhhh. I really don't feel sorry for you. My unlimited data plan with ATT has always been 39.99. They just reduced it to 30 and I'm happy for that. I just glad you are not special anymore.
Posted by Karl | June 11, 2008 10:16 AM
I'm still waiting for the Sprint/Apple/CDMA/Verizon iPhone agreement hopefully next December.(IMHO) I'm currently paying $15 a month for an unlimited Sprint EVDO data plan which is relatively fast on my Treo. Although I'm not sure Sprint users will be immune to a rate hike once Sprint has to pay Apple's licensing fees too.
Posted by Tech Treo User | June 12, 2008 3:33 PM
Oh well. The price of data. Who cares. The phone came down substantially in cost. If you want to surf the web at those faster speeds...get the new phone. If not, then get the older one. Pay one way or the other.
It's the price of being unbridled from the desk.
I love my current iphone and it surfs fine using it's non-edge connection.
But when the new phone comes out, I'll have one because having the new toys is part of being in the mix now.
Enjoy!
Michael Murdock
Posted by Michael Murdock | June 12, 2008 3:43 PM
Sounds like ATT is double dipping.
They subsidize the phone now and as a result they get a larger cut (100%) of the monthly revenue PLUS they raise their rates by $10 a month.
My question is whether the phones are locked anymore. Since they are 3G can I pick one up in Europe and subscribe to another carriers plan (that might work here, say Alltel)? Or can I pick one up somewhere and just use a prepaid SIM card?
Posted by Stuart Berman | June 12, 2008 5:13 PM
I use T-Mobile, for the 39.95 I get 600 min plus unlimited nights and weekends. Add 19.95 and get unlimited data including 3G where it has been rolled out. Most major areas will be done by year end and I am waiting for the Apple killer, the HTC Diamond. Who wants a phone that can not use a spare battery ,or more importantly use a prepaid low cost SIM card when I travel, and T-Mobile will give you the unlock code.
Posted by Bob | June 12, 2008 7:58 PM
The word is not "jive," which means "dance," "get down," or "boogie." The word is "jibe," which means "to agree."
Although I might pay money to see AT&T's 3G network start to jive.
Posted by Partha | June 13, 2008 9:46 AM
Price gouging is what happens when the DOJ is after the money. For example coming up with reasons to fine large software makers because the governments tax revenue is low.
IF they actually would have paid attention to the SBC buyout of AT&T they would have known any AT&T customers would have gotten gouged over in the coming years aftert he merger. SBC was the most poorly run, very expensive telcos I have ever worked with. Now they have a monoply with Apple on the iPhone device and services market. Now where is the DOJ? Oh wait they are reviewing Windows 7 because Google, Apple, Sun, Redhat told then that Microsoft might want to "compete" with them. Excuse me Mr. DOJ, where is the comepetion for AT&T for iPhone service? Oh, wait, there is no competition.
Posted by qwest | June 22, 2008 9:55 AM
Everyone has a choice... the biggest is to not purchase the device or AT&T service - only then will the price reduce for they will then realize they have hit the pain point.
FWIW, I hope the new version will work better. I have tried a friend's iPhone and it leaves a bit to be desired as a phone... my main need. My Motorola has much better reception and sound. Any other features that the iPhone has... I can wait to use my laptop at a free wireless location.
Posted by Pragmatist | July 4, 2008 9:58 AM
I'm beginning to realize cellphone companies convince us we need more minutes than we actually do, especially AT&T. I discovered I'm much more of a data/texting consumer. I looked at my bills over the past 6 months and never used more than 400 minutes in a month, something I was sure I was exceeding. (I currently have a Blackberry plan with 900 minutes and 1500 texting).
AT&T has rollover minutes that accumulates you a pad of time each month and free mobile to mobile as well, which I could live on fine. So...if I stepped down to the 450 minute plan for the iPhone 3G and added the same amount of texting, I'd save about $20 a month switching to it after taxes. That means the 16gb iPhone would pay for itself in about 15 months and I'd bank about $180 in additional savings.
However, even given that, I'm still considering if I want an iPhone as I'm weary about the virtual keyboard and no MMS.
Posted by Norm | July 11, 2008 3:30 PM
This $199.00 iphone is a big Scum. At&T used this media stunt to get a free advertisment. In reality the iphone cost more than $900 if we include the servie price increase over two years. If we add the price increase in data usage, the price will jump to $1300. People watch out wht your paying befor you board the iphone wagon.
Posted by mike | July 14, 2008 7:04 PM