What Will iPad Buyers Pay AT&T for 4G LTE?
AT&T and Verizon are ready to take your wallet. But are iPad users prepared to hand it over?
There has been a lot of hoopla surrounding the 4G LTE support for the new iPad, which Apple has been touting as the most revolutionary device since the iPad 2. Most consumers I've spoken to do not seem interested in paying a monthly fee for iPad data. But they are (if nothing else) intrigued by the prospect of being able to surf the web wherever they go.
One of my colleagues told me that he plans buy a 4G LTE-supported iPad so that he can get a data plan if he ever wants one. I'm sure Apple (NASDAQ: AAPL) would love it if every consumer felt that way.
What will consumers pay for the privilege of using 4G LTE? Those who subscribe to AT&T (NYSE: T) will pay as little as $14.99 for 250MB and as much as $50 for 5GB, TechCrunch reports. While AT&T normally has the worst data plans, Verizon's (NYSE: VZ) options aren't necessarily better. AT&T customers can get 3GB for $30. At that rate, Verizon subscribers only receive 2GB. However, high-end subscribers will find Verizon's 10GB plan ($80) to be more cost-effective than AT&T's 5GB limit.
How much will consumers be charged if they exceed the limits of their data plan? Verizon customers will always be charged the same $10 for every additional 1GB of data. AT&T customers, on the other hand, are being hit with an unusual policy that corresponds with whatever data plan they've selected. Thus, those who are paying $14.99 for 250MB will be charged another $14.99 every time they go over the limit. That additional fee only covers another 250MB of data, which is AT&T's way of telling customers to get a bigger data plan. How so? By agreeing to pay $30 for 3GB or $50 for 5GB, AT&T will only charge an additional $10 a month – and provide another 1GB of data. But be warned: if you use more than 1GB, another fee will be incurred.
While these data plans are comparable to what we've been seeing for the iPhone 4S, they are still very costly. Sprint (NYSE: S) could have added some variety to the mix with an unlimited plan, but the company failed to secure a deal for the new iPad. This could be because Sprint – a company that was quick to brag about its 4G (standard) services – is without a proper 4G LTE setup. In fact, 4G LTE won't begin to roll out on Sprint until mid-2012. At that time, only customers in Baltimore, Kansas City, Dallas, Atlanta, Houston and San Antonio will be able to access the service. That's not enough to justify a new iPad.
Without any pricing models set, it is not yet known if Sprint will offer an unlimited data plan. But that's hardly an issue when 4G LTE isn't even available. And since the rollout will not be nationwide, it could be months before the average customer can take advantage of the faster network.
However, this does not mean that the new iPad will not come to Sprint at a later date. There is always the possibility that Apple will bring the tablet to Sprint as soon as the network is ready for mass consumption. It won't happen overnight, and it probably won't happen in the summer either. But a September/October launch is feasible.
Whether this iPad or the next one comes to Sprint, just one question remains: if data is unlimited, how much will the company charge?
Sprint currently charges a minimum of $49.99 per month for its mobile office connection package, which provides subscribers with a 3G/4G Dual Mode Sierra 250U wireless modem. The company also charges a minimum of $79.99 per month for its smartphone packages, which include unlimited minutes and texting in addition to unlimited data. So it's not a stretch to assume that an iPad 4G LTE plan could fall somewhere between $50 and $80.
Frankly, I think a $60 monthly plan that includes 10GB to 20GB of data could provide the best of both worlds for Sprint. No, it wouldn't be as cool or as marketing-friendly as an unlimited data plan (which, to be clear, is preferable to any other option available). But the reality is that 4G LTE is more valuable to iPad users than any other customer. The iPad was built to be a multimedia device. It was practically made for Netflix (NASDAQ: NFLX), Hulu, and YouTube. But to fully enjoy these services, telecommunications companies are going to expect us to pay a high price.
If, however, Sprint decided to offer 15GB for $60 per month, the company would have serious bragging rights against its competitors, who charge $130 to $150 for the same amount of data. And if Sprint provided its customers with 20GB for $60, the company would have an even greater advantage.
For unlimited data, Sprint would likely charge $80 to $100 if we're lucky. That's a high price to pay. But it's still cheaper than what the competition is offering.
Unfortunately, the “competition” is AT&T and Verizon, two companies that can afford to charge more because consumers are (for whatever the reason) willing to pay more.
Follow me @LouisBedigian
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.