AT&T cuts monthly fees for customers who pay off their device or bring their own.
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AT&T must be feeling the heat from T-Mobile. T-Mobile has pursued AT&T's customers aggressively this year with new rates and device financing. AT&T offered a tempered response several months ago, but didn't go far enough. AT&T introduced on Thursday new monthly service plans and device payment options that more closely match those of T-Mobile.
The plans, which AT&T is calling Mobile Share Value Plans, build on the framework it launched over the summer. The idea is that people pay for a basic set of services -- minutes, messaging, data -- and then add devices to that service. All the plans offer unlimited voice minutes, unlimited messaging, unlimited FaceTime, and unlimited access to AT&T WiFi, which are then paired with finite data allotments. The smallest amount of data available is 300 MB per month and the most is 50 GB.
First, AT&T has altered the monthly pricing for the data allotments. Many of the allotments cost the same, though some cost less and some cost more. Under the new plans, the 300-MB option costs $20 per month, with the 1-GB option following at $45, 2 GB at $55, 4 GB at $70, 6 GB at $80, 8 GB at $90, 10 GB at $100, and on up to 50 GB at $375.
Second, AT&T has changed how much it costs to add devices to these plans. Previously, AT&T charged $30 to add a feature phone to any of these plans and between $35 and $50 to add a smartphone to any of these plans. Moving forward, feature phones cost only $20, and smartphones won't cost more than $40. (Keep in mind these device charges are per line in addition to the service fee.)
Third, AT&T saw the light and realized it can't charge customers twice for their handsets (which it was doing under the previous plans). From now on, customers who complete their two-year contract (and effectively pay off their device) will see their monthly service charge automatically drop by $15 to $25. Customers who come to AT&T with their own phone will only pay the $25 monthly fee per line (on top of the basic service charge), as will customers who choose to pay full price for their device, and those who choose one of AT&T's Next device installment plans. This is critical.
One of the daring moves made by T-Mobile earlier this year was to separate the cost of the device from the cost of the service. Though the monthly bill was about the same, it provided a much clearer view about how much smartphones really cost. Customers who bring their own phone to T-Mobile or pay their phone off enjoy a monthly savings of approximately $20. AT&T wasn't matching this monthly savings until now. Unhooking device subsidies from the monthly service plan is a major win for AT&T customers.
The last component revealed by AT&T on Thursday is a new option for device financing. Previously, it offered either 12 months or 24 months. Now, an 18-month option is available. This lets people spread out their device payments over the amount of time that works best for them.
Parsing through the various options might require an accounting degree, but AT&T says most customers can save between $10 and $25 per month with the new plans. Savings hover at $15 per month for customers who select plans with lower data allotments, but range up to $50 the more data one chooses.
AT&T's new Mobile Share Value Plans go into effect on December 8. They will be available to all new customers and to existing customers who contact customer care.
Making decisions based on flashy macro trends while ignoring "little data" fundamentals is a recipe for failure. Also in the new, all-digital Blinded By Big Data issue of InformationWeek: How Coke Bottling's CIO manages mobile strategy. (Free registration required.)
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