AT&T scraps voice minutes for ‘shared data’ plan option
NEW YORK (CNNMoney) — Voice minutes are going the way of the dinosaur — and it’s going to cost you. Following Verizon’s lead, AT&T announced Wednesday, July 18th that it will begin offering shared data plans for smartphones, tablets and other connected gadgets.
Under the new “Mobile Share” plan, all of a household’s devices will draw from a single data allotment.
AT&T’s new pricing structure works similarly — but not identically — to Verizon’s “Share Everything” plan, which kicked off June 28.
AT&T customers pay for a monthly allotment of gigabytes they want to share across all of their connected devices, and pay an additional monthly per-device fee. All smartphones with the Mobile Share plan will come with unlimited voice and texts.
Existing AT&T customers can stick with their current plans, even when they upgrade their phones — for now. Starting in late August — AT&T didn’t set an exact date — both new and existing customers will have the option of choosing one of the shared-data plans.
Here’s a big difference from Verizon: AT&T isn’t making the new plans its only option. AT&T spokeswoman Emily Edmonds said AT&T will still offer its current plans for customers who want them.
For many AT&T customers, the new plans could be more expensive.
Today, the cheapest available AT&T smartphone plan is $60 a month, giving users 300 MB of data and 450 voice minutes per month. The cheapest Mobile Share plan, with 1 GB of data, is $85 per month.
AT&T’s new plan can save customers money — potentially a lot of money — if they’re heavier users with a number of devices, including iPads, laptops and Mi-Fi devices.
The primary difference between AT&T and Verizon’s data share plans is how they’re priced.
AT&T’s per-device fee drops as you add more data. An AT&T user with just 1 GB of data per month will have to pay $45 per smartphone, but an AT&T user with a 6 GB per month plan will pay just $35 per smartphone each month.
Verizon charges $40 per smartphone, regardless of how much data the customer pays for.
But Verizon’s biggest data plans are cheaper than AT&T’s. Verizon’s 6 GB plan is $80 per month — $10 less expensive than AT&T’s — and Verizon’s 10 GB plan ($100 per month) is $20 cheaper than its rival’s.
The bottom line: AT&T’s Mobile Share plan is cheaper for customers who have three or more smartphones and a data plan of 6 GB or more per month. At 4 GB, the plans cost exactly the same for smartphones, no matter how many phones are sharing data. For most other combinations, Verizon’s Share Everything plan is less expensive.
Both AT&T and Verizon describe their new plans as adding value, since they’re giving all users unlimited voice, texts and tethering to other devices.
But few customers actually use all those features. As data use grows, people are talking on their phones less. They have been scaling back their minutes, and the industry’s voice revenue has fallen dramatically over the past several years.
The average subscriber used just 638 voice minutes per month in 2011, down from 720 minutes in 2010, according to the latest data from PricewaterhouseCoopers.
Customers are cutting back their voice plans in response, sending carriers’ average revenue per smartphone user down to $83 per month last year. That’s a drop from $86 in 2010 and $93 from 2009.
Customers have also increasingly adopted Microsoft’s Skype and other voice apps that travel over the data network, as well as unlimited texting apps like Apple’s iMessage, Google Voice and GroupMe.
That’s a problem for AT&T, Verizon, and the rest of the wireless industry.Voice and texting offers a much higher profit margin than data, which requires carriers to continuously build up their networks to support exploding demand from smartphones and tablets.
At Fortune’s Brainstorm Tech conference this week, AT&T CEO Randall Stephenson acknowledged that the smartphone era caught the carriers by surprise.
“The iPhone came along and radically changed the industry,” he told Fortune’s Stephanie Mehta. “The industry has grappled with getting the pricing model turned.”
The new “share everything” plans allow carriers to stabilize their declining voice revenue and prepare for the near future, when even more devices will be connected to data plans.
“Today we think of people’s smartphones and tablets sharing a bucket of data,” said AT&T’s Christopher. “But in the future we’ll see health care monitors, connected cars, security systems and other devices in the home all connected to the mobile Internet.”
All those connected devices mean that the new pricing structure will “benefit AT&T substantially over the long term,” said Mike McCormack, telecommunications analyst at Nomura Securities.
It’s the start of a new era, in which voice is just a commodity and the world of connected devices has carriers seeing dollar signs.