AT&T Price Moves May Backfire

Efforts by the mobile-phone service provider to charge more for heavy data usage may alienate customers and stymie innovation and growth in the wireless Web

AT&T giveth and AT&T taketh away. The wireless service provider that has mastered all-you-can-eat monthly service packages for its mobile-phone customers is having second thoughts. Concerned that some customers are consuming more than their share of data over wireless networks, the company plans to offer some subscribers "incentives" to "reduce or modify their usage" of bandwidth, AT&T Mobility.
De la Vega, speaking at a conference in New York sponsored by investment bank UBSdidn't specify the company's plans, but said one step will be giving users more information on how much data they've consumed. Analysts speculate AT&T may move to a tiered pricing scheme where subscribers are charged more depending on how much bandwidth they use—say, through downloading videos or sending and receiving big documents. Some carriers in other countries, including Canada and Australia, already use tiered pricing. Yet in a market where customers have grown accustomed to paying a single fee no matter how much data they consume, a switch by AT&T, the largest U.S. mobile-phone operator, may backfire. Analysts and consumer advocates say the move may curb demand for smartphones and wireless data products, stymie development by programmers who specialize in mobile applications, and push subscribers into the arms of rivals,