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AT&T Drops Unlimited Data Pricing Plans

AT&T Drops Unlimited Data Pricing Plans
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Jun 2, 2010 3:00 PM PDT    Text size: 

WASHINGTON — AT&T Inc. today became the first major U.S. wireless company to move away from unlimited Internet pricing plans for new wireless subscribers, kicking off a shift in how carriers bill their customers.

The move — which marks the company’s second price cut for wireless plans in the last six months — came after months of talks about the need to switch to metered billing in an effort to reduce congestion and improve service on its mobile networks.

There's also concern about wireless consumer's complaints to the FCC about "bill shock."

The company said about three percent of its smartphone customers account for 40 percent of its wireless data usage.

AT&T has been particularly vulnerable to the network jams because it’s the exclusive carrier of Apple’s iPhone, whose customers tend to use more data than other subscribers.

The new billing structure takes effect June 7 when Apple is expected to announce its new iPhone.

AT&T said it will eliminate its $30 unlimited data plan for new smartphone subscribers and replace it with new offerings costing $15 a month for 200 megabytes of data traffic (about 1,000 emails without attachments, 400 Internet-page views or 20 minutes of streaming video), or $25 a month for two gigabytes. AT&T said 98 percent of its customers use less than the two gigabyte upgrade.

The new plans will lower the cost of an entry-level voice and data plan to $54.99 from $70. The company thinks the lower price will bring in customers deterred by the current cost.

"I think what it's going to do is bring more people into the smartphone marketplace," said Ralph de la Vega, head of AT&T's wireless operations.

The new plan may benefit most subscribers, but regular users of streaming video services like Google's YouTube or audio services like Internet radio could quickly burn through their allotments, AT&T said.

"A lot of people use less than they think they do," AT&T spokesman Mark Siegel said. "Customers will be warned via text or email if they approach their limit and they can check their usage easily with their phones."

Existing smartphone customers and iPad users can keep their existing plans indefinitely (even if they switch phones). The company is hoping customers will shift their data use to more robust Wi-Fi networks, where unlimited use of 20,000 hot spots around the country will be free under the plans.

A tethering option will also be available for an additional $20 a month that allows customers to use their phones as modems to hook up their laptops to the Internet. Tethering will become available after Apple releases its newest iPhone operating system later "this summer," AT&T said.

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