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AT&T hikes data prices, caps for smartphones

While the company is offering more data per buck, the price increase raises the minimum bar for a first-time user.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
Expertise Mobile, 5G, Big Tech, Social Media Credentials
  • SABEW Best in Business 2011 Award for Breaking News Coverage, Eddie Award in 2020 for 5G coverage, runner-up National Arts & Entertainment Journalism Award for culture analysis.
Roger Cheng
2 min read
Will people still be lining up at AT&T stores after the latest round of price increases like they did two years ago? If it's for the iPhone, then yes. Maggie Reardon/CNET

AT&T today said it plans to hike the data plan rates that are required with the purchase of any smartphone--including the iPhone--a reflection of the growing bandwidth demands the carrier faces.

The company's previous bottom-tier $15 plan will go up to $20, although the amount of data allocated also goes up to 300 from 200 megabytes. Likewise, the $25, 2 gigabyte plan goes up to a $30, 3GB one. Its high-end $45, 4GB plan--which includes the mobile hot-spot capability--goes up to $50 for 5GB. The new plans start on Sunday.

AT&T said existing customers can keep their current plans.

That AT&T is raising its rates and the amount of data each plan allows underscores the growing use of smartphones, even from customers making the first-time jump into these devices. The carrier hopes that with the increased allocation, it will be able to avoid customers going over their plans, which result in overage fees.

"They really want to prevent overages," said Roger Entner, a consultant with Recon Analytics. "Nobody is happy about overages--it makes unhappy customers, and unhappy customers tend to leave."

Still, the price hike comes at a time when customers are more sensitive than ever, raising the minimum bar for customers looking to make the smartphone jump. Last week, the head of AT&T's mobile and consumer divisions, Ralph de la Vega, told CNET that making smartphones more affordable was a major initiative at the carrier. At the Consumer Electronics Show, the company showed off two 4G LTE smartphones it plans to price at under $50 to entice newcomers.

AT&T moved cautiously when it first offered a tiered data plan, but since then its $15 offer has been successful at convincing customers to upgrade to smartphone plan. It was the first major carrier to push through the idea of capped data plans at a time when bandwidth and wireless traffic was exploding.

The company also tweaked its tablet data plan, increasing it to 3GB for $30 a month, up from 2GB for $25. There's also a new higher end plan that offers 5GB for $50.

The company has been dealing with increasing data consumption, moving to throttle, or slow the connection, of consumers who exceed a certain limit (the limit changes from month to month depending on usage). At the same time, it is working to create a shared data plan, allowing multiple devices to connect to the network with one bill, but De la Vega said there have been complications with getting that rolled out correctly.

Verizon Wireless, meanwhile, has been testing out a 300MB plan for $20 a month in select markets in the south. It previously ran a promotion for 4GB of data for $30 a month, but it expired Sunday.

Updated at 2:39 p.m. PT: to include additional background and details on the tablet plans.