AT&T Raises Prices for Low-Data Users, Lowers Rates for High-Data Plans--Update

By Drew FitzGerald 

AT&T Inc. on Wednesday introduced a new slate of wireless plans that raised prices for its most frugal customers, while lowering costs for its biggest data users.

The company's new mobile share advantage plan also will eliminate overage fees, opting instead to slow wireless speeds for customers who have topped their monthly data allowances. That move follows the model used by discounters T-Mobile US Inc. and Sprint Corp., which have dropped overage charges. Verizon Communications Inc. charges its subscribers a fee to avoid such charges.

"The carriers have all conceded that overage charges probably aren't the answer," said Craig Moffett, senior analyst at research firm MoffettNathanson. "Overage charges trigger calls into customer service, more unhappy customers and ultimately more churn."

AT&T's price change, its first since last year, follows a similar step by rival Verizon Communications Inc. which raised prices in July for each of its plans while also increasing the data allowances. And it comes amid signs that the aggressive discounting the nation's biggest carriers have been using in recent years is slowing down.

Under the changes, AT&T's lowest-tier data plans now will cost $10 more a month but offer more data. For instance, its cheapest plan will cost customers $30 a month with one gigabyte of data, compared with $20 a month for 300 megabytes of data previously.

That contrasts with its bigger data plans for which prices have come down substantially. A 30-gigabyte plan now costs $135 a month, down from $225. And its new plan prices are now more comparable to Verizon's revised rates.

AT&T also lowered some activation fees by charging most subscribers $20 a month for having a smartphone connected to the system.

AT&T spokeswoman Emily Edmonds said customers of AT&T's most popular 15-gigabyte plan now will pay less. Customers also can keep their old plans if they wish. The new rates will be available on Aug. 21. Its new pricing is now more comparable with Verizon's revised rates.

Some U.S. wireless companies have hinted at possible price increases after years of rate cuts that have eaten into profits. But the expected release later this year of a new iPhone model from Apple Inc. could complicate that effort if wireless companies feel the need to offer deeper promotions to get customers to upgrade their handsets.

Write to Drew FitzGerald at [e-mail]

(END) Dow Jones Newswires

August 17, 2016 15:52 ET (19:52 GMT)

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