Wednesday, June 6, 2012

AT&T to Ditch Minute-based Mobile Plans, Push Consumers into More Expensive Unlimited Calling

The amount of time wireless customers spend actually talking on the wireless phones has declined for 5 straight years.  To prevent customers from saving money by switching to calling plans that offer less monthly talk time, AT&T is considering dumping the plans and forcing customers into more expensive unlimited calling plans:
"The industry's definitely moving towards unlimited," AT&T Mobility Chief Executive Ralph de la Vega said in a recent interview. "Especially as more people adopt smartphones that have voice capabilities over the Internet, segmented voice plans will become less relevant."
The average phone call lasted 3.03 minutes in 2006, the year before the iPhone was rolled out by AT&T. At the end of last year, it took 1.78 minutes, down by nearly half. Monthly use by the customers who buy contracts has followed suit. After peaking at an average of 826 minutes per month in 2007, the average fell to 681 minutes at the end of 2011.
Purchases of smaller monthly allotments of minutes hit sales at AT&T, Verizon Wireless and T-Mobile, which reported declines of about 2% to 4% in voice revenue in the first quarter.
If wireless carriers do get rid of minute-based voice plans for contract users, it will echo the steps some have taken to shore up revenue from texting. Carriers are seeing slower growth in use of their lucrative texting services, as subscribers switch to free services like Apple's iMessage or the third-party service WhatsApp. In response, AT&T last year got rid of plans that charged for bundles of texts and replaced them with unlimited plans.
Meanwhile, in areas where AT&T is seeing growth in usage they are removing unlimited plans in order to charge customers more through metered usage:

Telecom companies are taking the opposite approach with their data plans. Confident that data use is growing quickly, carriers have moved away from unlimited plans in favor of tiered offerings that charge subscribers more dollars when they use more megabytes.
AT&T was first to shift to tiered data plans nearly two years ago. Verizon Wireless, co-owned by Verizon Communications Inc. and Vodafone Group PLC, followed suit last year. Sprint and T-Mobile still offer unlimited data plans.
The moves have helped data revenue increase quickly, but it still is dwarfed by voice charges. Data accounted for 37% of carriers' $169.8 billion in wireless revenue last year, compared with 12% in 2006.

 Related: AT&T looking to dump rural customers

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