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What the iPad Tells Us About Mobile Broadband Pricing

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No matter what you think of the newly launched Apple (s aapl)  iPad, it confirms a shift in the way mobile broadband services are priced, albeit a subtle one. Yesterday I wondered if Apple had it in for AT&T (s t) because the prepaid data plan offered more data for less than existing AT&T prepaid plans, and because with an unlimited plan that mirrored the pricing on the iPhone plan, it seemed like AT&T would have double or quadruple the traffic without a corresponding increase in revenue.

But after listening in on the AT&T earnings call today, I realize that AT&T thinks it won’t be so hard up, and that the iPad data pricing continues a pattern of pricing mobile broadband based on the device. Much like prices are different for data via a data card or dongle based on the expected usage pattern, the data plan on the iPad is less because AT&T hopes a “substantial” amount of the web surfing will occur over the Wi-Fi network, AT&T’s CFO Rick Linder said on the call. If it turns out that isn’t the case, then Linder said AT&T would re-evaluate the pricing plans. AT&T does expect the iPad data consumption to fall somewhere between that of an iPhone and a laptop.

Plus the fact that AT&T isn’t subsidizing the iPad — and doesn’t have subscriber billing and other costs associated with it — means the carrier isn’t terribly concerned about the iPad’s effect on its margins. Check out the chart below to see the costs for AT&T associated with the two devices.

iPhone iPad
Avg. Data Consumption 500 MB per month 1-2 GB per month
Unlimited Plan $29.99 $29.99
250 MB Plan none for the iPhone, but AT&T charges $29.99 for pre-paid 250 MB plans $14.99
Subsidy $351 $0
Estimated Traffic Sent Via Wi-Fi 10 percent to 20 percent analysts estimate 50 percent or more

10 Responses to “What the iPad Tells Us About Mobile Broadband Pricing”

  1. broadband pricing as a whole is going down anyway…I was surprise by the 14.99 point point and the unlimited 29.99 one although I think that even for the unlimited one, it will be cap at 5 megabite. And also why would the AT&T network want to take on any more data traffic?

  2. $30 for unlimited seems a fair deal, assuming there’s no “hidden” 5GB cap to screw you if you go over. For a device sized perfectly for viewing streaming TV and video, however, I’d be inclined to think some iPad users will shoot past 5GB easily.

    Charging $130 for a 3G radio though is a ripoff. The bare hardware costs maybe $30.

  3. i believe the reality is a bit different. if consumers are satisfied(and they do not need tech blogger level of service for satisfaction, the key is that users do not experience regular total non usability but slower than wired and/or wifi could be acceptable) with the 3g experience on the iPad than wifi based tethering of there laptop, other portable devices and even desktops will start to take off in a very big way. this capability will begin to be demanded as mandatory and the carriers will have little choice but to offer up.

    i happen to believe it can indeed be done and done well but require a concept of millions of tiny cell sites perhaps on top of city light posts.