AT&T Robs iPhone Users and Brags About It
AT&T (NYSE: T) released its second-quarter results this morning, highlighting a number of areas in which the company has increased its revenue.
During the period, AT&T increased wireless data revenues by 18.8 percent - a $1 billion increase from the year-earlier quarter. Wireless data revenue totaled $6.4 billion.
AT&T also announced that its postpaid ARPU (which AT&T defines as "average monthly revenues per subscriber") continued to grow, rising 1.7 percent to $64.93.
This is the 14th consecutive quarter that the company posted a year-over-year increase in postpaid ARPU. However, AT&T fails to explain how it achieved its success.
Over the past several months, the telecommunications giant has been implementing a number of policies to further enhance its growing cash cow: data usage. In January, the company began to throttle its heaviest users. One report suggested that data speeds could drop after using just a few gigabytes of data. But this only affected customers who had been with the company long enough to sign up for (and keep) an unlimited data plan. Those who pay for data packages (which are not unlimited) are never throttled. Instead, they are charged an additional fee for every additional chunk of data that they use.
This policy seemed to be risky at best. But AT&T was apparently willing to risk losing these customers to Sprint (NYSE: S) - the only carrier that offers unlimited, un-throttled data - in order to persuade some of them to pay more for data.
iPhone 4S users currently pay $20 per month for just 300MB of data. For $10 more, users can get 3GB, or 10 times more data. Heavy data users can buy a 5GB package for $50 a month.
Users who go over their monthly data allotment will pay an additional fee based on their existing data plan. For example, customers who are on the 300MB plan will be charged an additional $20 for every 300MB of data they use. But customers on the 3GB or 5GB plan will be charged $10 for every 1GB they use. (Note: Additional fees are incurred the moment users go over their initial data allotment.)
This is how AT&T is able to achieve an ARPU of $64.93.
When the company reports its third-quarter results in three months, it might be able to brag about another ARPU increase. Now that AT&T has figured out how to get unlimited data users to pay for tiered plans, the company has come up with another way to milk the system - family data plans.
With a family data plan, users are forced to share data with other members of their household who are on the same monthly plan. Customers who want 4GB of data, for example, will have to pay $70 a month plus $40 for every smartphone on the plan. Unlimited minutes and unlimited text messages are included in the plan. But that is still a very pricey option, especially when it could be difficult for customers to keep track of how much data is used between multiple users.
While individual users are charged $10 for every 1GB of additional data, AT&T charges $15 for every 1GB of additional data used within a family plan.
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