By BRIAN X. CHEN | New York Times
Verizon and AT&T reported their quarterly earnings in the past week, and they told nearly identical stories: Both are making a lot of money just from mobile data - the fees customers pay to access the Internet over their networks. Some numbers shared by AT&T make it clear why.
Ralph de la Vega, chief executive of AT&T Mobility, said during Tuesday's earnings call that about 60 percent of smartphone customers were paying for tiered data plans, and of those, 70 percent were choosing the higher-priced plans.
For its tiered data plans, AT&T charges $20 for 300 megabytes of data, $30 for three gigabytes or $50 for five.
Verizon's data plans are similar: $30 for two GB, $50 for five GB or $80 for 10 GB.
Mr. de la Vega's statement suggests that the majority of people on AT&T's tiered plans are paying at least $30 for three GB, or more.
And it turns out that three GB is far more than most people use. A recent Cisco study shows that the average amount of data used per smartphone last year was 150 MB - just 5 percent of 3 GB. And this year, Cisco predicts 100 million smartphones will surpass just 1 GB of usage.
The fact that the majority of customers using tiered data plans are paying for three gigs or more shows that AT&T has successfully created a pricing structure that compels people to pay for far more data than they will actually use.
Also worth noting is that AT&T raised the prices of its tiered data plans earlier this year. Previously, the two options were $15 for 200 MB, or $25 for two GB.
The revised AT&T plan actually reduced the cost per megabyte - with the 300-MB plan at $20, for example, customers paid 6.7 cents a megabyte, whereas with the older 200-MB plan at $15, customers paid 7.5 cents a megabyte. So in terms of value, the new AT&T plan is a better deal. But if you aren't using most of the data you pay for, you aren't really saving money.
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