by Bill Snyder

AT&T Socks it to Wireless Customers Yet Again

Jan 20, 20123 mins
CarriersMobileSmall and Medium Business

New AT&T subscribers will pay an extra $5 a month for metered data plans, an increase of more than 30 percent, as wireless carriers continue to raise prices because they can.

AT&T is ratcheting up the cost of wireless data plans. Again.  Come Sunday, new subscribers to Ma Bell’s network will be paying about one-third more than existing customers, who will not be affected. At least not yet.

There is a slight saving grace. The more expensive plans will deliver more data, so the actual price per megabyte is going down. On the other hand, customers won’t have a choice. It’s a bit like being forced to buy a larger,  more expensive box of cereal, whether you need the extra Cheerios or not.

The cheapest plan you’ll be able to buy for an iPhone or Android smartphone will now cost $20 for 300 megabytes of data a month, which is about 90 minutes of streaming video. That’s an increase of $5 over the current price of $15 a month for 200 megabytes of data.

Other tiers will go up as well.  Instead of paying $25 for 2 GB of data, customers will pay $30 for 3 GB of data. At the high end, AT&T will charge $50 for 5 GB of data (with mobile hotspot/tethering) instead of $45 for 4GB with tethering.

You can learn more details of the new plans and read how AT&T explains the reasons for the changes on the company’s consumer blog.

It’s no secret that consumers are, well, consuming a lot more data as sales of smartphones and tablets continue to increase. And satisfying that demand does cost carriers substantial amounts of money. Do they have a right to recoup that investment and make a profit? Of course they do.

So why am I’m complaining? The wireless market is hardly competitive. Between them, Verizon and AT&T control the lion’s share of the market, and it’s hardly a coincidence that price hikes and changes like the end of unlimited data plans implemented by one giant is quickly mirrored by the other.

“That AT&T and Verizon both continue to match each other’s prices by ratcheting them up higher, not lower, illustrates just how broken the U.S. wireless market is,” says Derek Turner, director of research for Free Press, a non-partisan consumer advocacy group.

If you read AT&T’s blog, you’ll notice that the company gives itself a big pat on the back because it will send alerts to consumers who are close to using up their data allowances. Yes, that’s a good thing, but don’t forget that the carriers only started that practice after consumer groups like Free Press complained loudly to Congress and the Federal Communications Commission.

Indeed, a  survey by the FCC in 2010, before carriers were sending out alerts, found that about one in six cell phone users has experienced what the agency appropriately calls “bill shock,” an unexpected spike in a monthly bill unrelated to a change in contract or service.

It’s also worth noting that AT&T has steadily increased the amount of revenue it extracts from consumers who pay for mobile data. AT&T has more than doubled average monthly data revenue per customer from $12.01 at year-end 2007 to $25.14 in last year’s third quarter.

Keep those numbers in mind when you hear Ma Bell’s mouthpieces go on about data hogs, not to mention the fact that AT&T earned a profit of $3.6 billion in just three months last year — the third quarter to be exact.  And at the time, an AT&T official bragged that: “If you take those one-time items out of the mix, profit was actually up 13 percent year-over-year. In addition, wireless margins were up significantly, which means wireless profits increased.”

Need I say more?