Higher data usage and new markets expected to increase profits going forward
AT&T knows that it can't keep providing subsidized devices to customers forever. Speaking at an investor conference in New York, CEO of AT&T Randall Stephenson explained that with smartphone adoption at 75 percent and rising, the cost of offering devices on subsidies just isn't financially viable. Just as we've all seen, carriers in the U.S. have been offering handsets for little or no money on-contract to drive smartphone adoption rates, but now with so many people buying expensive phones it's starting to take a toll.
New "Mobile Share Value" plans that give you a $15 break in your monthly bill for bringing your device or keeping one past two years is the first indication of this realization, but so are AT&T's increased prepaid efforts. Between its own GoPhone brand that has increased data allowances at reduced prices and acquisitions of other prepaid brands like Leap, AT&T plans to continue moving down market with smartphones to increase its subscriber base.
The nation's second-largest carrier doesn't intend to just lower rates and take a cut in profits, however. Stephenson explained that a decrease in the standard monthly price of having AT&T service will be made up in the long run with higher data usage on tiered plans, as well as moves into new markets like home automation and automobiles. Not to mention its new device financing plan, AT&T NEXT, which lets customers buy new phones without a subsidy.