AT&T Ponders iPhone Data Fee Cut: They Must Think Customers Are Stupid

By MG Siegler

Facing criticism that even the minimum iPhone monthly bill is too high for many consumers, AT&T (T) is reportedly thinking about cutting its prices. The big rumored change is that AT&T would apparently offer a limited data package for $20-a-month, a $10-a-month reduction over the current all-you-can-eat plan. This makes me laugh because AT&T clearly thinks consumers are stupid.

If AT&T really wanted to reduce monthly iPhone bills it could do something very simple: Start including SMS plans in its unlimited data plans. After all, SMS is data, yet it conveniently falls outside of AT&T’s unlimited service. The reason for this is obvious: Text messages are an absolute cash cow for AT&T and the other carriers. They are also an absolute rip-off, as they cost the carriers next to nothing to transmit. Instead of just folding these SMS fees into the unlimited data plans like rival Sprint (S) does, AT&T wants to pretend to save consumers money by offering a limited data package for $10 less a month. What a joke.

Ever since the launch of the iPhone 3G, AT&T has been fleecing customers with text messaging fees. With the first version of the iPhone, users at least got to send 50 text messages for free with their unlimited data plans. With the iPhone 3G’s updated date plan (which was still just as “unlimited” but with faster download speeds), AT&T cut out all free texts and made users pay at least $5-a-month, unless they wanted to pay the utterly ridiculous $0.20 per text. So basically, that was AT&T jacking up the price of the iPhone plans by at least $5 right there. And many people, myself included, use way more than 200 messages, so it’s more like an extra $15-$20-a-month for either 1500 messages or unlimited messages. Again, a joke when we’re already paying for an “unlimited” data plan.

Worse, is that a lot of people pay the $5-a-month for the 200 texts, and then go way over, meaning they’re paying a lot more than even an extra $20-a-month for unlimited SMS. So while AT&T reducing data plans by $10-a-month may seem significant, on a month-to-month basis with the SMS fees, it’s really not. And worse, this cheaper iPhone data plan would be limited, and users are probably going to go over that limit as well, which will likely end up costing them more than the $10 they’re saving a month.

This “price cut” is pure spin by AT&T. I’m not even convinced that this cheaper plan will be cheaper for anyone in the long run. If it really wanted to reduce the price of the iPhone data plans, it would eliminate the text message fees. And I’m fine if it wants to offer a plan which is the same as the current prices with unlimited text messaging bundled-in, and then offer a cheaper one without the messages included. That’s how it should be. Their “unlimited” plan is a joke.

Original post

Comments

[stockfan:]

AT&T plan pricing stupidity is exactly why my iPhone calls T-mobile home.

May 18 03:33 PM

[brewer:]

AT&T doesn't even help advertise the iPhone. Instead, they push the hideous Blackberries, etc...

Apple really should get out of the exclusive contract with them. The iPhone would sell even better than it does, clearly, if it were available on better carriers.

May 18 03:38 PM

[Bergen:]

The plan at current rate should include SMS text messaging as suggested and the ability to tether. If I pay for data, I should get to use the data.

May 18 03:44 PM

[waf76:]

My average bill with the iphone per month is $100 - $110. That includes the cheapest phone plan at $39.99, the unlimited data at $29.99, and the unlimited text messaging for $19.99. So what i have found is that most people who like the iphone but don't wanna get it is not bc of the cost of the phone but bc of the cost of the service. I dont even talk on the cell phone that much but am paying 100 bucks so someone who needs a more robust phone plan is looking at a $150 phone bill. I agree the text messaging should be included.

May 18 03:47 PM

[Chris_K:]

I have no problem with separating out SMS from other data. In my case, I rarely use text messages, so I'd rather have a lower price and let folks who need unlimited text messages pay an extra fee for that. I'd actually pay the $30 a month for data if I could tether it, but right now, I agree that clearly for the service provided, AT&T is charging more than is competitive. If they simply dropped their unlimited data plan price by $10 (to $20), and offered a limited data plan for $10 a month, they'd have people beating down the doors to buy iPhones.

The one area where AT&T *is* good on pricing in for their voice plans. Their rollover minutes make what they charge for voice a good value--for most of us who have highly variable voice calling usage at least.

May 18 04:17 PM

[Purdone:]

No one needs an iPhone. They want them. Shame on AT&T for making money. booo hoooo hooooo.

May 18 04:33 PM

[alg:]

A great number of people have bought the IPod Touch and also need a cell phone. AT&T should have a plan for voice only, no data which would appeal to these people. They could even raise the price of the phone by $100. The advantage is that they would gain subscribers and have no additional load on their over capacity 3G network. At some point the subscriber might decide that they want data and income would go up. I would leave Verizon in a NY minute if they offered such a plan. As it is, by the end of the summer I will probably get a Touch and stay with Verizon. Alas I think this is too far outside the box for Mr. de la Vega

May 18 04:38 PM

[eve:]

I watch tv in my living room. I get the news (most of it from my computer, My music I listen to comes from my radio, you remember those? I have a land line that never fails me and I don't even have to charge it. I also have a cell phone, my first. I have lived 75 yrs with out one so when I did get one it was more out of curiosity than need. Now I wonder what's the big deal? It doesn't work in some places and works poorly in others. You get what you pay for, that rule has never changed...the only thing that is important is to be able to call anyone from anywhere and at any time. That doesn't happen..

May 18 07:10 PM

[mgs in conn...:]

is anyone at at&t listening ? does anyone in dallas even have a remote idea on how to do business ? up here in the "dumb" northeast we used to value the customer--at&t clearly values the green of money. treat the consummer as if they were number one and the money will come. wake up dallas, before it is too late.

May 18 08:42 PM

[mollytjm:]

att is worried about the inevitable time when other carriers have the iPhone. this is a lamentable effort to try to lure customers into contracts now. i love the iPhone and use it all the time but because texting is extra, i use 'textlite' (an app). it's not ideal...you still pay if the other person doesn't have textlite or you get just a regular text. but it works for the very few places my phone won't work well.

but i agree with the author... texting is a huge cash cow so it's unlikely they'll offer it as 'already included'. I'm just hoping that eventually multiple carriers will mean better prices on contracts.

and it also does annoy me when i see ATT ads for the Blackberry! i know they carry everything and obviously it's good for them...but it makes it clear they have no loyalty to Apple...so i won't feel bad leaving ATT.

May 19 08:55 AM

[knight722:]

I wonder if any of these commentators own T?

May 19 06:02 PM

[World_Talks:]

Texting is just very expensive almost anywhere - Europe tends to be 25¢ per message sent, although free incoming, in the west, and people text like mad. Maybe that is because they are used to paying for each minute even on local landline calls, and things like unlimited nights, weekends, mobile-to-mobile are not considered.

Fact is that the voice plans here are very cheap compared to anywhere else. Messaging and data prices are subsidizing this - hey, even ringtones are paying to keep the lights on (ever question why a ringtone for a short segment of a song that sounds pretty shoddy costs so much more than iTunes songs?)

May 20 07:52 AM

[d2:]

Well, if this is any consolation to you, T has lost OVER $12 BILLIONS in market cap in last 10 sessions, never mind its beta. And still falling.

Everyone can see through the American telephone scene - which is so horrible for the consumer, the economy, and American competitiveness. If the American Telephony Executives thought that they are providing "free" mobile phones to consumers, well, I can only pity their intelligence.

May 20 03:55 PM