Critics: AT&T, Verizon price cuts set stage for higher data rates

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Talk is cheap, at least if you consider how AT&T and Verizon Wireless have just chopped the price of unlimited nationwide voice calling plans from $100 to $70 a month.

Even though those reductions are favorable to some customers, including users of the iPhone at AT&T, critics are concerned that the nation’s two largest carriers are merely currying favor with the public and setting the stage for eventual hikes in data rates. It’s long been known that users are moving heavily to more data use, including a shift to voice-over-IP and video, and that the carriers need to adapt their pricing plans to protect revenues.

With the cheaper unlimited voice plans, however, “the carriers are just trying to win political points and goodwill to use on gouging people more on data plans later,” said Chris Riley, policy counsel for Free Press, a Washington-based non-profit consumer advocacy group that favors Net neutrality reforms. “They are under a lot of scrutiny by the Federal Communications Commission, but people are still paying a lot of money for voice and data plans.”

Riley noted that data users are exposed to extraordinary charges if they use more than 5GB per month, paying from $200 to $500 more per 1GB of data above the 5GB limit.

Because very few users need unlimited voice plans, Riley also asserted that the reductions are somewhat meaningless. And because both plans were reduced exactly by the same amount at the same time, he added, “It’s not a sign of price competition in the industry, but of trying to drive users to heavier usage brackets.”

A spokesman for another non-profit consumer advocacy, Public Citizen, echoed that view: “This [voice plan reduction] appears simply to be a shift to the reality that much of the traffic will be data, rather than voice, traffic.”

An AT&T spokesman said the unlimited voice calling reduction had “nothing whatsoever” to do with data rates eventually going up. However, he did note that the announcement included an new imposition on users of a category of phones called Quick Messaging Devices to pay a minimum of $20 a month on top of voice plans for some combination of texting and data plans. The previous minimum on such users was $5 a month for 200 text messages, AT&T said.

A Verizon spokeswoman declined to respond to the Free Press criticism.

AT&T Mobility CEO Ralph de la Vega has for months been suggesting that the heaviest users of wireless data might face higher fees under some sort of metering approach. In December, de la Vega said “there’s got to be some pricing scheme that addresses the [heavy] users.”

AT&T’s spokesman said Tuesday there has not been any more movement on such a data pricing plan.

This story, "Critics: AT&T, Verizon price cuts set stage for higher data rates" was originally published by Computerworld.

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