AT&T reportedly is gearing up to stop offering discounted tablet computers under two-year contracts, coinciding with a major shift in how it bills customers.
A source sent Engadget a document showing that AT&T customers purchasing a tablet no longer have a two-year pricing option after Aug. 19. AT&T customers will still have the option to purchase tablets and share data without entering into a commitment, according to the document. But the tablets will be sold at "no-commitment", or presumably, full prices.
Mark Siegel, an AT&T spokesman, declined Monday to comment on the report when asked to confirm the information.
U.S. wireless carriers have offered discounts on mobile devices including smartphones and tablets as a way to lure customers into long-term contracts with significant financial commitments.
Weston Henderek, a principal analyst with Current Analysis, isn't surprised that AT&T is reportedly cutting subsidies on tablets. He cited AT&T's introduction of shared data plans, which grant customers unlimited talk and text and allow them to share data on up to 10 devices.
AT&T will begin offering shared data plans on Aug. 23.
Through AT&T's "Mobile Share", customers can add a tablet for $10 per month. "You can't really justify throwing a subsidy on a tablet if you are only getting an extra $10," Henderek said, noting that Verizon Wireless also has stopped offering discounts on tablets.
Furthermore, unlike a smartphone in which customers need access all the time to make and receive calls, customers generally don't constantly require wireless broadband connectivity to their tablet unless they are traveling, the analyst said. Henderek also noted AT&T customers have the option under the shared data plans to add and remove devices during the contract term. (AT&T's Siegel confirmed this). That means a customer with a connected tablet might swap out the gadget for a gaming device, creating further disincentive to subsidize a tablet.
Then, there's the reality that most customers aren't fond of entering into multiple long-term contracts with their wireless provider.
"People are much more apt to go for a no contract plan [on a tablet] rather than go to prepaid on the voice side as an example just because of the nature of how they use data," Henderek said.