Cited: CNN

AT&T announced earlier this week that they would be raising rates on data service to their customers that use SmartPhones. The higher rates will go into effect next week but will only be charged to new customers. Their existing customers will still be charged the same rates on the contracts they originally signed. The increases represent a fairly hefty hike in some instances with the cost of the lowest AT&T package rising to $20 per month, an increase of 33%. For its part, AT&T is trying to cushion the blow by telling its new clients that they will be getting up to 300 megabytes per month versus 200 megabytes now offered under this plan.

Other AT&T plans will also cost more with their higher level service rising by 20% to $30 per month. Analyst say that the timing of the rate hikes comes on the back of rumors that Apple will soon introduce the iPad3 with AT&T wanting to get in front of the launch with higher rates. These same analysts also believe that the move by AT&T is risky and that many of its clients will look to other service providers instead of paying the higher rates. In particular they note that AT&T could stand to lose significant market share to Verizon because of their 4G service.

However, other analysts are quick to point out that all of the service providers have increased prices before especially as usage and demands on the system have been stressed to the limits and customers haven’t walked away from any of them in significant numbers. With more and more devises requiring more bandwidth, customers are likely to pay the higher fees or find a plan tailored to their needs, which AT&T is confident they will have for them.

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My take:

Its not like there are a lot of choices just yet to provide the service needed by these phones. After all, you can find an inexpensive cell phone company, but not one that can do all that these SmartPhones require. The bottom line is that people will pay for what they need until they decide they don’t need it anymore.

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