Killing unlimited data plans has helped make U.S. carriers billions
AT&T and Verizon both took in more than $6 billion in the last quarter in mobile-data revenues, but AT&T's CEO is still losing sleep.
Killing off their unlimited data plans in recent years hasn't made U.S. wireless carriers very popular in certain circles, but it has helped them make a lot of money off your mobile-data habit.
The New York Times reported this week that in the last quarter alone, AT&T reported more than $6.1 billion in revenues from mobile-data plans, while Verizon took in $6.6 billion. Those numbers also reveal significant growth of as much as 20 percent on an annual basis, despite the fact that carriers are adding customers at a slower pace now that most people already have a smartphone. That's because more people are gobbling up more wireless data, and they're also paying more for it as Verizon and AT&T have stopped offering unlimited data to new customers in favor of a variety of tiered pricing plans and overage charges that all add up -- literally -- to billions for the carriers and their shareholders.
This doesn't stop the carriers, particularly AT&T, from trying to have it both ways.
"My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat," the Times reported AT&T CEO Randall Stephenson saying at a conference this week. He decried the variable costs involved in the unlimited-data model and went on to explain how he loses sleep over services like Skype and Apple's iMessage that threaten other revenue streams like texting and voice calls.
AT&T finds itself in the difficult position of having to remain bullish on its network and mobile data growth in particular to keep shareholders excited, but at the same time always warning of an impending capacity crunch. Carriers are taking in billions from tiered data plans, but increasingly users are actually using up a higher percentage of their data allowances. That means more network traffic without more revenue to compensate, particularly since a large number of users are already on the top-end tiers.
That's the bad news for carriers. The good news is that they've got billions of our dollars coming in each month to spend on addressing the problem. Verizon is clearly moving in that direction with its rapidly expanding, and now that T-Mobile is off the table, we'll see how AT&T chooses to spend our... err, its, mobile-data riches.