iPhone Data Plan Versions

at&t is most likely to offer a new data plan at lower price for its iPhone subscribers. Previously I wrote that they should not simply cut the price of current plan. Such a price cut would require them to add subscribers at a much higher rate than they are adding today to recoup lost profits. Obviously at&t is considering price discrimination using multiple data plan versions. As the saying goes, if one price is good two prices are better. Reuters reports that at&t executive confirmed versioning:

The executive said it would be costly for AT&T to cut the price of its unlimited Web surfing service. The minimum plan for iPhone users is $70 a month, which includes unlimited Web surfing and a certain amount of voice calls.

at&t is probably looking at  consumer surplus for different segments for these two plans to set the price of the new plan. The new version will come with severe bandwidth restrictions – it will be designed such that the new subscribers will self select themselves when presented with the two versions.

Those who want iPhone for its simplicity, cool-ness, music and games capabilities but do not care for bandwidth most likely did not get iPhone until now because of their lower willingness to pay for data plan.  These will now be incented to pick the low-priced data plan despite the restrictions. (These could be customers who would prefer an iPod Touch that has mobile phone capabilities)

Serious iPhone subscribers with need for email and extensive web surfing will be nudged to pick the current data plan and not the low priced restricted option.

In fact if at&t’s market research data indicates that there is a higher percentage of the first segment then they might even increase the price of current data plan while introducing the lower priced version.


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