Here’s Why AT&T Hates Your Unlimited Data Plan

AT&T’s (NYSE:T) chief executive regrets the company ever having introduced unlimited data plans, and says worries over loss of revenue from free texting services such as Apple’s (NASDAQ:AAPL) iMessage keep him awake at night.

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Speaking at a conference in Los Angeles, Randall Stephenson said AT&T’s initial unlimited data plans were a bad decision because it now forces light data users to subsidize heavy ones, instead of the latter simply paying more for more use. “My only regret was how we introduced pricing in the beginning, because how did we introduce pricing?” he said. “Thirty dollars and you get all you can eat. And it’s a variable cost model. Every additional megabyte you use in this network, I have to invest capital.”

AT&T stopped offering unlimited data in 2010 to move to tiered data plans. In the first quarter of the year, it reported $6.1 billion in revenue from mobile data alone, with 70 percent users paying for the more expensive options.

Stephenson was also worried about Skype’s growing popularity, as well Apple’s free Internet-based messaging service. “You lie awake at night worrying about what is that which will disrupt your business model,” he said. “Apple iMessage is a classic example. If you’re using iMessage, you’re not using one of our messaging services, right? That’s disruptive to our messaging revenue stream.”

However, Stephenson was happy that the then Cingular Wireless, which became AT&T, had decided to would support the iPhone before Apple’s smartphone became as successful as it is today. While the company was nervous, Stephenson said, he decided to go ahead.

“I remember asking the question: Are we investing in a business model, are we investing in a product or are we investing in Steve Jobs?” Mr. Stephenson said. “The answer to the question was, you’re investing in Steve Jobs. Let’s go after this thing. And we went after it, and the rest is history.”

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