Thursday, July 21, 2011 at 5:08 pm.
AT&T customers spending more than ever on data, despite cheaper plans and free texting apps
Last summer, AT&T was the first major U.S. carrier to drop its unlimited data plan for new subscribers. In its place, AT&T has offered two metered data plans, each less expensive than the previous unlimited plan, which cost $30 per month.
But despite that move — and despite the rise of free texting apps for smartphones — AT&T subscribers continue to spend more on mobile data service than ever before.
AT&T “postpaid” subscribers — those who buy subsidized phones and sign long-term contracts — spent an average $63.87 per month for cellphone service last quarter, up $1.24 from a year ago, AT&T reported today.
Among postpaid subscribers, almost 40% of their bills — $24.57 per month, on average — went toward data service, which includes text messaging and mobile Internet access. Data spending was up $3.50 per month, or 17%, from the year prior. This despite the availability of cheaper data plans and the ability to send free text messages via apps like WhatsApp, Textfree, and others.
This is good news and bad news for AT&T and other carriers.
It’s good, of course, that data spending continues to grow — even accelerate a hair — as more subscribers buy smartphones. AT&T said today that 70% of its postpaid device sales last quarter were smartphones, and half of its postpaid subscriber base now has smartphones. (Part of the overall “average” growth, no doubt, is simply a higher mix of smartphone subscribers.)
But more smartphones also means a lot more bandwidth consumption, which means more infrastructure, which means spending more money. AT&T’s wireless operating income margin was 27% last quarter, up a bit from the prior quarter, but down from a year ago, when it was 29%.
Metered data subscriptions, in theory, mean that as bandwidth consumption grows, customers will spend more money, and AT&T will be able to make more on its investment.
But it also gives software developers like Skype and Apple more incentive to help consumers spend less on overpriced, high-margin mobile services, such as voice calling and text messaging. Apple’s forthcoming iMessage service — which lets iPhone, iPad, and iPod touch owners message each other for free, without using the SMS service — will be particularly interesting.