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Wall Street Unsure Of AT&T's New Unlimited Data Plans

Running a national carrier is difficult, especially one with stakeholders demanding results. We have already seen T-Mobile US and their “Uncarrier” initiatives upsetting Wall Street, as their way of running a network could stunt potential revenue growth in the medium to longer term. And now it’s the turn of AT&T, where investment analysts have criticized the new plan to offer customers unlimited data, although they have highlighted that the new deal is likely to attract customers to both its cell plans and DirecTV businesses. The deal offers customers unlimited airtime, text messages and data for $100 a month for the first line. A second line costs another $40, as does a third line with the fourth line being free; however the deal is only available to customers of AT&T DirecTV or AT&T U-Verse TV. Even so, $180 for four lines of unlimited anything is sure to be a tempting proposition for many people.

Moody’s, the investment analyst, note: “AT&T should gain marketing traction by offering a highly valued customer benefit that has largely been phased out… …We think that customers will be attracted to the unlimited plan offer and that it will drive modest subscriber growth at both AT&T wireless and DirecTV.” Moody’s go on to explain that they believe that revune from new customers will more than offset the increased costs associated with providing unlimited data. AT&T’s plan here appears to be to target the fifteen million DirecTV subscribers that do not have an AT&T cell phone. However, AT&T are also sure to be releasing these new plans as a means of fending off T-Mobile US and their aggressive unlimited data plans especially when combined with the unlimited mobile video service, Binge On.

This, however, is Moody’s concern: that despite AT&T saying that they will not rise to the threat of competition, their introduction of an unlimited data plan could trigger a price war between the carriers, and how this would erode one of the few remaining avenues for revenue growth in the industry: data volume. Returning to unlimited data plans would almost certainly be a stumbling point in this plan and highlights the difficulties a carrier faces between keeping customers and investors happy. On the high street, customers may welcome a price war between competitor carriers offering unlimited or very high data allowance plans for less and less.