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New AT&T data-plan 'value' could be a false economy for many subscribers
Jan 23, 2012 2:00 PM

AT&T's newly announced data-pricing plans, which the number-two carrier is touting as “more data and value” actually provide dubious added value in exchange for sizable price hikes of 11 to 33 percent, a new study reveals. Here’s why:

The average AT&T smart-phone data user consumed nearly 600 megabytes per month in the fourth quarter of last year, according to a study of 9,114 AT&T bills by Validas, an automated wireless-bill analysis and reduction service. The average user probably already buys the 2GB plan for $25, and the new 3GB-for-$30 plan provides an additional gigabyte of unneeded data.

“Our findings call into question whether the new plan effectively offers better ‘real world’ value for the average user,” says Dylan Breslin-Barnhart, a Validas spokesman. Validas says it saves its consumer and business customers an average of $400 a year with such actual-use analyses, which help find the most cost-effective wireless plans.

AT&T’s “value” claim is based on the new plans’ lower unit prices. The 3GB-for-$30 plan, for example, has a unit price of $10 per gigabyte, versus the 2GB-for-$25 plan’s $12.50 per gigabyte.

Unit pricing is a consumer tool used to measure the comparative value of merchandise in bigger versus smaller packages, and it works fine in the supermarket. But wireless data is not the same kind of purchase as, say, laundry detergent. You don’t throw out your unused detergent at the end of the month, so a cheaper-by-the-gallon bulk purchase is a true savings. But unused units of wireless data expire at the end of each month, so buying extra data that you don’t use won’t save you money.

Nor is the average user’s AT&T smart-phone data usage rising fast enough to suggest the need for a bigger cushion of extra data. Validas’ numbers show that average monthly data usage rose 47 percent, from 386MB in the first quarter of 2011 to 568MB in the fourth quarter. But even if that pace of growth were to continue, the average user wouldn’t outgrow the 2GB-per-month plan until sometime in 2014—nowhere near as soon as January 22, 2012, when the new plans take effect for new customers or existing customers who want to switch.

Also note that the new pricing takes back the 17 percent savings that users of less than 2GB got when AT&T killed unlimited data plans costing $30 a month and introduced tiered pricing, including the 2GB-for-$25 data plan in 2010. New customers who need less than 2GB a month will now have to pay $30 for a limited 3GB. (Then, as now, existing customers were not required to switch, thus grandfathering the old plans.)

Below is a data-plan price-comparison chart for the big-four wireless carriers.

Monthly Wireless Data Plans for Smart Phones
AT&T
Sprint
T-Mobile
Verizon
$20 for 300MB
$15 for unlimited data
(e-mail, Web, music, and Sprint TV only)
$70 for 200MB
(Includes unlimited talk and text)
$10 for 75MB
(for feature phones only)
$30 for 3GB
$30 for unlimited data
(adds pictures, texting and videos)
$80 for 2GB
(Includes unlimited talk and text)
$30 for 2GB
$50 for 5GB
(includes tethering)
$70 for unlimited data
(includes 450 minutes of talk)
$90 for 5GB
(Includes unlimited talk and text)
$50 for 5GB
 
$100 for unlimited everything
$120 for 10GB
(Includes unlimited talk and text)
$80 for 10GB
Overage charges:
Overage charges:
Overage charges:
Overage charges:
$20 per 300MB or
$10 per GB
(depending on plan)
None
For $70 per month plan only:
$0.10 per MB
(Data connection speeds will be slowed for other plans)
$10 per 75MB or
$10 per GB
(depending on plan)
Additional fees
Additional fees
Additional fees
Additional fees
None
$10 for "premium data"
$15 for tethering
$20/month for tethering and an extra 2GB

—Jeff Blyskal

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