What the iPad Tells Us About Mobile Broadband Pricing

No matter what you think of the newly launched AppleĀ  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 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
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