AT&T to offer unlimited U-verse data usage option, increases caps on other tiers

AT&T (NYSE: T) will soon introduce an unlimited data option for U-verse Internet customers, playing into the consumer desire to have an all-you-can-eat broadband experience free of restrictive usage caps.

Under the new plan, which will be formally introduced on May 23, customers who only subscribe to only AT&T's U-verse broadband service can sign up for its unlimited home Internet data plan for an additional $30 a month.

Additionally, customers who currently subscribe to a monthly double-play bundle of U-verse Internet and DirecTV or U-verse TV and pay for services on a single bill are eligible to get unlimited home Internet data at no additional charge.

Bob Bickerstaff, VP of voice and data products for AT&T, said in blog post that subscribers can switch to the new unlimited plan at any time.

"If you ever decide that you want to switch to unlimited home Internet data or add TV service, you will be able to do that immediately, even in the middle of your billing cycle," Bickerstaff said.

The service provider plans to also give the majority of its U-verse Internet customers an automatic increase in their monthly data usage allowance. U-verse Internet data allowances will automatically increase -- 250 GB (gigabytes) will increase to 300 GB or 600 GB, and 500 GB to 1TB. AT&T said that the exact amount will be based on a customer's Internet speed tier.

Brett Sappington, director of Research for Parks Associates, said in a research note that AT&T's move makes sense as it reflects the fact that users are leveraging their broadband connection to not only send and receive e-mails, but increasingly to view bandwidth hungry streaming video content on You Tube and Netflix (NASDAQ: NFLX).

"As consumers adopt high speed services, their consumption of data increased," Sappington said. "They tend to connect more devices, stream more videos, and enjoy other data-driven activities. Over time, an increasing number were likely to exceed AT&T's previous limits of 150 or 250 GB per month."

The service provider is also looking to be more transparent about how it is measuring customers' broadband usage. Customers that don't subscribe to an unlimited home Internet plan and exceed their allowance will receive increments of 50 GB of additional data for $10 each.

Since tracking usage can be a confusing process for most every day users, AT&T will send users seven notices via e-mail over several months before being required to purchase additional data.

"The usage of approximately 4% of AT&T U-verse Internet customers currently exceeds our new higher data allowance," Bickerstaff said. "We're taking extra steps to make sure you know if you're approaching your data allowance."

The service provider will provide notifications over three billing cycles. In the first billing cycle, AT&T will notify a user when they reach 100 percent of their data allowance without any charges, while in the second billing cycle the telco will tell the user when it reaches 65 percent, 90 percent, and 100 percent of their allowance without charges.

However, in the third billing cycle and any thereafter, users will get reminder e-mails when they reach 65 and 90 percent of their allowance. When a user reaches 100 percent, AT&T will send a notification with the option of adding an additional 50 GB of data to their account for $10 each time the allowance is exceed.

AT&T added that customers will receive reminders about their data usage for the additional 50 GB at 75 percent and 100 percent, but the maximum monthly overage charge is $100.

Sappington said that AT&T's move is a way to alleviate potential churn. Consumers in AT&T's markets are being given more options by cable operators such as Comcast (NASDAQ: CMCSA) and Cox to subscribe to speeds up to 1 Gbps in certain markets like Atlanta.

"Managing consumer expectations is extremely important in a highly competitive marketplace," Sappington said. "If consumers are caught by surprise with additional charges, they will be likely to switch providers out of frustration."

For more:
- see this AT&T blog post

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