AT&T Says Forget About Cheaper Data Rates For The iPhone 3G S


imageAT&T (NYSE: T) may want iPhone sales to continue at a fast clip, and it may want to extend its exclusive contract with Apple (NSDQ: AAPL), but it is not willing to drop data plan rates for the phone in order to do that.

AT&T spokesman Mark Siegel told Dow Jones that there are no plans to alter the company’s data prices when the iPhone 3G S goes on sale next Friday. Siegel: “We’ve been very happy with our pricing.” And, why wouldn’t they? The average monthly bill for an iPhone user is in the mid-$90 range.

Prior to Apple’s WWDC this week, rumors were circulating that AT&T would drop the minimum voice and data plan from $69 a month to $59 a month. The price cut would be an easy way to boost iPhone sales in these rough economic times. But AT&T was all but absent from the event. It seems they are reluctant to open the flood gates. Besides dropping data rates, it will not be offering tethering or MMS from the start. It will also be very costly for a current iPhone customer, who remain on contract, to upgrade from the old iPhone to the 3G S. In the worse case scenario, the new phone could cost as much as $700. However, AT&T will be offering one bargain: the older iPhone 3G costs $99, or half as much.

There’s likely a reason that AT&T is treading lightly. It is heavily subsidizing the cost of the phone already, and iPhone users tend to use more data, which is starting to put a strain on the operator’s network. To fix that, AT&T is investing in network upgrades to double the speed for iPhone 3G S. Those kinds of capital investments require big bucks.

Going forward, the one likely scenario is for AT&T to start tiered pricing plans. While it may not make customers happy, it could lower the data plans for those who are willing to consume less data. As part of that, AT&T may also start charging an additional fee for new services, such as MMS and tethering. Subscribers could opt to pay another $10 to $40 or so to a monthly bill.

The plans will have to be well explained to consumers, who may start to see other companies as a better deal. For instance, Sprint (NYSE: S) Nextel, which just started selling the Palm (NSDQ: PALM) Pre, offers its “Simply Everything” plan, which includes unlimited voice, data, text messaging and things like TV. Sprint’s subsidiary Boost Mobile is offering a similar plan for $50.



If you remember in the first generation EDGE iPhone, the data plan was $20. That was done b/c the iPhone price tag was unsubsidized but as the subsidies came, the pricing normalized with the rest of the smartphone data plans including BlackBerry. There is little desire to make it cheaper since the plan is uniform with the rest of the portfolio and in line competitively with rivals'. While a price drop would be welcomed by the general public, AT&T would likely eats into the margins they're used to. And while some can argue that you make better revenues and profit up in increased uptake, any change in data plan pricing would in essence start a data plan price war in the industry. Like on the voice side, no carrier wants a price war, especially when data revenues are the prime driver for future profit. Still if a lower plan does come, it'll most likely to be data limited like on the mobile broadband side, capped at some number (e.g., 250 MB).

Unlocked iPhones are fine in the US since there are no subsidies and qite frankly a new iPhone 3Gs or a iPhone 3G for that matter will be useless in the U.S. since T-Mobile's 3G (AWS) frequencies are incompatible with the iPhone's radios current HSDPA (850/1.9G/2.1G).


Apple people are used to paying two or three times the price of standard stuff for their shiny toys. ATT know this and will continue to screw them. Why is this a mystery?

T Tattler

Mark Siegel is from Corporation Communications in AT&T and just does press releases. Mr. Siegel is not knowledgeable about wireless networks and mobile users. He reflects the problem of AT&T consolidating Mobility into Consumer Markets at the new Dallas headquarters. Verizon's success has been network and marketing/sales managers collaborating in regional offices. AT&T's layers of senior and assistant vice presidents in landline and long distance marketing are rushing to mobility to save jobs. They are generating the plethora of marketing releases for branding TV shows, contests and events. AT&T was cause for audience for laughter at Apple's WWDC show. And AT&T was not in attendance. AT&T was at the Emerging Device Conference pitching more branding and billing options. Mr. Glenn Lurie, President of their Emerging Devices, is like a mobile roadshow. Differently, Apple perpetuates its brand loyalty by understanding users and staying close to customers.

Ross Rader

AT&T is going to shoot themselves in the foot. Reading the tea leaves a bit, I think they are going to give Apple just enough of an excuse to go it alone and start selling unlocked handsets directly to consumers. Which will suck for AT&T (and Palm) and be really awesome for everyone else.

I wrote a blog about it yesterday –



Man, I really wish Apple would offer the iphone through other wireless carriers. At&T is the only thing holding me back. More competition = better prices

Joshua O

I was hoping to switch to an iPhone and I'm waiting for the data plans to drop…..
So, I'll continue to wait. I'd take one without data plan just for the phone, apps, ipod, contacts and calendaring. I usually would only use internet on a handheld where there is wifi anyway.

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