How AT&T’s Two New Unlimited Plans Stack Up To Competitors

by Trefis Team
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Wireless behemoth AT&T (NYSE:T) appears to be taking unlimited data much more seriously, launching two new plans last week, as it looks to take on smaller rivals such as Sprint and T-Mobile – who have made unlimited the centerpiece of their strategies in recent months – and larger rival Verizon, which recently launched its own unlimited offering after a six-year hiatus. Below we take a look at how the two plans could potentially impact AT&T’s wireless business.

See our complete analysis for AT&T here

We have a $44 price estimate for AT&T, which is roughly in line with the current market price.

The Two Plan Strategy Doesn’t Hit The Sweet Spot

Although AT&T began offering an unlimited data plan more than a year ago, before Sprint and T-Mobile, the offer was limited to the company’s pay TV customers. However, the two new plans will cater to a wider spectrum of users. The Unlimited Plus plan, priced at $90 a month for a single line or $185 a month for four lines, offers unlimited data at full LTE speeds, tethering and HD video. AT&T is also offering a $25 per month discount for subscribers who also sign up for its pay TV service. This plan is targeted at power users and potential pay TV subscribers. That said, this plan still remains the most expensive unlimited offering among the major carriers, as it is priced at a $30 premium compared to Sprint and $10 compared to Verizon.

The second plan, a bare bones plan called Unlimited Choice, is priced at $60 per month for a single line or $160 for four lines. The plan limits speeds to just 3 Mbps and only offers SD video, targeting more casual users who would like the flexibility of having unlimited data.  This should allow AT&T to provide an unlimited offering at price points similar to Sprint and T-Mobile, without putting stress on its network. This could be important, considering that AT&T has less spectrum on a per-subscriber basis than both of its smaller rivals. However, the relative lack of features could make the plan less attractive for value-conscious subscribers.


There Are Some Benefits For AT&T

While both plans are priced higher than AT&T’s phone-only ARPU of $59 per month (as of Q4 2016), we believe that the net ARPU impact will be neutral, as there is a possibility that heavy data users on tiered plans will shift down to lower-priced unlimited offerings. That said, there will be some passive benefits from the new plan as well; for example, these customers will likely be signing up for paper-free billing and auto pay, which is preferable both logistically and from a cost and credit risk standpoint. Moreover, customer service costs could also come down on account of potentially lower call center volumes associated with fully unlimited plans.

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