AT&T planning shake-up of SMS plans next week

The carrier will eliminate its 1,000-message plan for new customers, offering them, for the most part, only an unlimited option.

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
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Will AT&T's SMS plans be changed?
Will AT&T's SMS plans be changed? CNET TV

AT&T is cutting down on available text-messaging plans.

The carrier confirmed to CNET this morning that, for new customers, it will ditch its 1,000-message plan, which went for $10 per month, in favor of unlimited-only options. Unlimited messaging for individuals will be available for $20 per month starting on August 21, while a family messaging plan for $30-per-month will also be offered.

"The vast majority of our customers prefer unlimited plans," an AT&T spokesman told CNET in a phone conversation today. "And with text messaging growing, the number of people interested in these plans will keep growing."

Users who don't want to get into a plan can opt to pay 20 cents per SMS, or 30 cents per message when sending pictures or video.

Current customers who subscribe to AT&T's 1,000-message plan will continue to pay $10 per month for the option. AT&T's spokesman confirmed that current customers with the 1,000-messages plan can keep it, even if they enter into a new two-year agreement and buy a new handset.

Engadget was first to report the news.

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AT&T's new messaging plans come even as customers' reliance upon SMS might soon wane. At its Worldwide Developers Conference in June, Apple announced that iOS 5 will come with a new messaging platform, called iMessage. With that, users of iOS-based devices will be able to send free text messages to each other over both Wi-Fi and 3G. The service also supports photos, videos, locations, and contacts.

That could be troublesome for AT&T, since the company activates millions of iPhones every quarter. Although text messages to non iOS-based devices will still be charged, if customers start to opt for iMessage over traditional text messaging, the carrier might see SMS usage decline.

Earlier this year, analysts at UBS estimated that text messaging volume growth was down to 21 percent in the first quarter for AT&T. UBS said that the company's growth in the prior year was 41 percent.

However, in a note to CNET today, AT&T offered up exact figures on its text-messaging growth. A company spokesman said that messaging volume increased by 25.6 percent in the first quarter. Second-quarter growth hit 24 percent, the company said.

Declines in text-messaging can be a drag on a carrier's business, UBS said earlier this year. The analyst reported that the average carrier makes an 80-cent profit on every dollar it generates in text-messaging revenue.

Update at 8:10 a.m. to include AT&T text-messaging-volume details.