AT&T: No Decision to Eliminate Flat-Rate Data Pricing

“We have not made any decision to implement tiered pricing.”

That’s what Ralph de la Vega, president and chief executive for mobility and consumer markets at AT&T Inc. told the Wall Street Journal this week. In the wake of statements that the carrier plans to “encourage” mobile data-hogs to scale back on their usage, analysts and other industry watchers began to note that a move to charging by the megabyte might be inevitable. De la Vega then took to the press to remind us that no decision to do so has been made.

Should we add a “yet” to that?

De la Vega declined to talk about what those incentives will look like, but did say that AT&T is taking other steps to avoid moving away from flat-rate pricing, like the deployment of femtocells and giving access to more Wi-Fi for free, in order to offload traffic whenever possible from the strained 3G network.

AT&T has settled into a double-edged-sword situation with its iPhone exclusive, as the device has sparked unprecedented levels of mobile data usage. But as usage is up, the flat-rate pricing remains the same, resulting in a falling revenue-per-megabyte for the carrier – not good news when one is trying to fund network upgrades to handle all that data traffic.

And the upgrades are necessary. AT&T has been famously hard hit by congestion in the access and backhaul networks, stemming from the large amount of primarily iPhone-related data traffic. It has 2,000 more cell sites planned so far.

“What we are seeing in the U.S. today in terms of smartphone penetration, 3G data, nobody else is seeing in the rest of the planet,” de la Vega said a UBS investor’s conference in New York last week. “The amount of growth and data that we are seeing in wireless data is unprecedented.”

He said that 3 percent of AT&T’s smartphone users consume about 40 percent of all wireless data. “We’re going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage, so they don’t crowd out the customers on those same cell sites,” he said.

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