AT&T to Close the Data Buffet - TheStreet

AT&T to Close the Data Buffet

Ma Bell ends the all-you-can-eat unlimited plan and caps data usage on a tiered approach.
Author:
Publish date:

Updated with stock reaction to AT&T data pricing plan.

NEW YORK (

TheStreet

) --

AT&T

(T) - Get Report

is ushering out unlimited plans and bringing back the meter for tiered wireless data pricing.

Just ahead of the new

Apple iPhone

introduction next week, AT&T has unveiled two data plans that include additional charges for users that exceed usage limits.

Though current customers can keep their $30 a month unlimited data plans, the new prices mark the end of one-size-fits-all approach to billing. The move helps AT&T attract budget shoppers with a $15 entry-level charge capped at 200 megabytes and bigger spenders can opt for a $25 plan capped at 2 gigabytes.

The new plans coincide with the debut of

Apple's redesigned iPhone

. Theoretically, AT&T can offer a premium plan for the new iPhone and a cheaper data service to go along with a potentially

lower-priced iPhone

3GS.

The real beauty of the new prices for AT&T is that subscribers can now be billed more for heavy use. As industry observers would say, the new plans bring back the so-called overage charges that add up to big bonus payments for telcos as users exceed their limits.

AT&T says it can alert subscribers when they are approaching the data allotment, but when the $15/200 megabyte limit is exceeded, customers will be billed double with another $15 charge for the month. Similarly, subscribers on the $25/2 gigabyte plan will get hit with an additional $10 charge and another 2 gigabyte cap.

This metered billing system was abandoned early in the mobile phone game, but people started using faster, smarter phones that caused data usage to skyrocket. Telcos have hinted that the unlimited approach wasn't a good fit for an increasingly mobile Internet market.

Verizon

(VZ) - Get Report

is likely to follow with its own tiered pricing plan.

AT&T says it will also allow tethering for top tier customers for an additional $20. This service is designed to share the phone's data connection with laptops.

AT&T shares were up 1% to $24.68 in in mid-afternoon trading Wednesday.

--Written by Scott Moritz in New York