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OsoMarron (is boss) · 06-04-2010, 02:35 AM

AT&T wireless scraps flat-rate Internet plan

New iPhone and iPad customers: AT&T's putting an end to its all-you-can-eat Internet plans.

AT&T on Wednesday announced data plans for new smart phone customers that charge based on how much data they consume.

The move will allow users more flexibility to buy into lower-priced data plans but could spell higher costs for its small but growing base of active Internet subscribers, such as business users.

The company said that starting June 7, new customers of gadgets such as the iPhone and BlackBerry Curve (and soon Apple's 3G wireless-enabled iPad), will choose between two options:

1) A $15 monthly plan for 200 megabytes of data. If you go over that allotment, you will pay $15 for every additional 200 MB of data used.

2) Or $25 for 2 gigabytes of data. If you go over, you'll end up paying $10 for each additional gigabyte.

Existing smart phone customers can renew their unlimited $30 data plans. When asked how long a customer can keep renewing, spokesman Mark Seigel said, "I can't speculate on the future."

The plan affects new subscribers, existing customers who want to upgrade from a basic feature phone to a smart phone, and existing smart phone users who want to switch out of their flat-rate plan.

"To give more people the opportunity to experience these benefits, we're breaking free from the traditional 'one-size-fits all' pricing model and making the mobile Internet more affordable to a greater number of people," said Ralph de la Vega, president and CEO of AT&T Mobility.

Currently, 98 percent of AT&T customers use less than 2 gigabytes of data a month (that's about 16 hours of streaming video). But analysts predict users will suck up more Internet capacity as new devices -- the iPad, iPhone HD, HTC Evo -- hit the market. These tablets and phones are touted for their ability to deliver video and other data-hungry applications better than anything we've seen yet.

The new pricing for data plans is expected to be adopted by other wireless service providers who see greater revenue potential from data usage, particularly as they upgrade their networks to faster fourth-generation (4G) speeds later this year. And it should make users more aware of how much data they consume, which could alleviate congestion on wireless networks -- a problem that has beleaguered AT&T with the popularity of the iPhone, which the company carries exclusively on its network. Check out this interview I had last January with Verizon Wireless CTO Dick Lynch, where he discussed the end of flat rate plans.

Barclays Capital analyst James Ratcliffe wrote today in a note to clients that the pricing changes will "bend the curve" on how users consume Internet data on their wireless devices and that the move could prompt others to follow suit.

Because all current customers would be unaffected, AT&T would face limited backlash, Ratcliffe said. And since very few new customers are likely to hit the price cap, their bills would be lower. Other carriers may find it hard to market their plans against the cheaper AT&T options, he said.