AT&T (NYSE: T) may want iPhone sales to continue at a fast clip, and it may want to extend its exclusive contract with Apple (NSDQ: AAPL), but it is not willing to drop data plan rates for the phone in order to do that.
AT&T spokesman Mark Siegel told Dow Jones that there are no plans to alter the company’s data prices when the iPhone 3G S goes on sale next Friday. Siegel: “We’ve been very happy with our pricing.” And, why wouldn’t they? The average monthly bill for an iPhone user is in the mid-$90 range.
Prior to Apple’s WWDC this week, rumors were circulating that AT&T would drop the minimum voice and data plan from $69 a month to $59 a month. The price cut would be an easy way to boost iPhone sales in these rough economic times. But AT&T was all but absent from the event. It seems they are reluctant to open the flood gates. Besides dropping data rates, it will not be offering tethering or MMS from the start. It will also be very costly for a current iPhone customer, who remain on contract, to upgrade from the old iPhone to the 3G S. In the worse case scenario, the new phone could cost as much as $700. However, AT&T will be offering one bargain: the older iPhone 3G costs $99, or half as much.
There’s likely a reason that AT&T is treading lightly. It is heavily subsidizing the cost of the phone already, and iPhone users tend to use more data, which is starting to put a strain on the operator’s network. To fix that, AT&T is investing in network upgrades to double the speed for iPhone 3G S. Those kinds of capital investments require big bucks.
Going forward, the one likely scenario is for AT&T to start tiered pricing plans. While it may not make customers happy, it could lower the data plans for those who are willing to consume less data. As part of that, AT&T may also start charging an additional fee for new services, such as MMS and tethering. Subscribers could opt to pay another $10 to $40 or so to a monthly bill.
The plans will have to be well explained to consumers, who may start to see other companies as a better deal. For instance, Sprint (NYSE: S) Nextel, which just started selling the Palm (NSDQ: PALM) Pre, offers its “Simply Everything” plan, which includes unlimited voice, data, text messaging and things like TV. Sprint’s subsidiary Boost Mobile is offering a similar plan for $50.