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AT&T's Price Push Is a Blown Call

Ma Bell ends flat-rate pricing but misses the $19.99 sweet spot, leaving a big opening for rival Verizon.

NEW YORK (

TheStreet

) --

AT&T's

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opening shot in the data plan price war missed the mark.

By offering a skimpy $15/200-megabyte monthly option and a plumper $25/2-gigabyte plan, AT&T's new data pricing has a big gap in the middle.

"AT&T has set up a data pricing war and left the most valuable price point open," said Michael Cote of the Cote Collaborative. "A $19.95 price makes sense and our surveys show that most people expect to pay $20 a month for data."

AT&T said Wednesday it was eliminating its $30 unlimited,

all-you-can-eat data

service plan and switching to a metered approach to cap usage. The move is likely to lure budget shoppers to smartphones with lower monthly charges as well as curb the heavy users who clog the network with

Google's

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YouTube downloads and

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Pandora

music streaming.

Rival

Verizon

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is expected to respond eventually with its own tiered pricing approach, and it's likely that the No. 1 wireless shop will jump in at the $19.99 mark with a big data allotment.

"The real question is how will AT&T counter Verizon's plan," Cote said.

More on AT&T's New Price Plan AT&T to Close the Data Buffet

AT&T announced its new pricing system ahead of

Apple's

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expected introduction of the redesigned Apple iPhone Monday. The dual tier prices give AT&T a big-ticket plan for new iPhone subscribers and a cheap ticket to accompany the presumably lower-priced iPhone 3GS.

While Cote sees the end of flat-rate prices as a good thing for telcos, phone makers and even consumers who may have been waiting for cheaper data plans, he said the net effect will be a reduction in heavy data consumption.

Now that people know the meter is running, they will conserve their resources, said Cote. "Knowledge or awareness is the first step toward changing behavior."

--Written by Scott Moritz in New York.