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Author: Sue Rudd
Publication Date: Jun 24 2010
Pages: 17
 Report Type: Report, Word

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AT&T’s New Tiered Mobile Data Pricing Revenue Neutral or Market Expander



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Report Summary:

AT&T is introducing its new ‘Tiered Pricing’ plan for iphones and smartphone mobile data, with two levels of 'capped' mobile data pricing and add on ‘buckets’ of gigabytes(GB) for heavier usage.

In this report we analyze the impact of AT&T’s new tiered pricing plan on its US market and revenues as projected by Strategy Analytics Tariff Response Model(TRM). We created several Scenarios using the TRM to see if these new plans meet AT&T’s objectives to:

- Introduce Tiered Pricing
- Expand the smartphone data market
- Maintain ‘Revenue Neutrality’
- Reduce Network Traffic Congestion?

From these Scenarios it appears that AT&T can indeed reduce the strain on its network and cut operating expenses while remaining ‘Revenue Neutral’. To expand the market however AT&T needs to look at its overall pricing scheme – not just mobile data - and consider how changes in the initial device fees and inclusion of unlimited messaging might dramatically expand overall adoption of smartphone mobile data service.

An additional high tier service plan for heavy users with a 4GB ‘cap‘ and unlimited messaging could potentially be profitable for AT&T. Bundling unlimited messaging services with all plan tiers is one service modification that could dramatically expand the total market by over $3.7 billion dollars a year.

Related Blog Post: Lower Smartphone Data Plans Smart Business for AT&T

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