AT&T’s hike in data plans by at least $5 in most cases may come back to hurt the telecom giant as consumers turn to competitors, analysts say.
The firm announced that starting Sunday its lowest smartphone data plan will begin at $20 for 300 megabytes of data, compared to $15 for 200MB of data.
Other smartphone data plans: $30 for 3 gigabytes, up from $25 for 2GB. It’s top biggest plan will be $50 for 5GB, up from $45 for 4GB.
Tablet data plans will also change. Users will still get a $15 plan for 250MB. But they will see increases in bigger data plans: $30 for 3GB of data, up from $25 for 2GB. The biggest tablet plan will rise to $50 for 5GB of data from $45 for 4GB.
Current customers won’t be affected by the price changes over the weekend. Spokesman Mark Seigel said renewing customers can stick with old plans.
So what can you actually do with these plans? With the largest $50 tablet plan, you can watch about three and a half hours of YouTube videos in a month. Or on the smallest smartphone plan, you can browse about 400 Web pages or upload about 50 photos to Facebook, according to AT&T.
Hungry data users pushed the company to change its plans, AT&T said.
“Customers are using more data than ever before,” said David Christopher, AT&T’s chief marketing officer in a news release. “Our new plans are driven by this increasing demand in a highly competitive environment.”
The changes, however, could hurt the company as customers look to competitors for better prices. With the most coveted devices — particularly the iPhone — on all networks, AT&T has lost its edge against Verizon and Sprint Nextel, analysts say.
And AT&T is behind Verizon in building out its high-speed 4G LTE network.
“While we generally regard price increases as a positive in a deflationary industry such as telecom, we think the timing of these changes places (AT&T) at risk of significantly increasing churn,” said Macquarie equities analyst Kevin Smithen.