Why autos are an opportunity as AT&T’s Mobile Share plan takes off

AT&T’s Mobile Share Value plan has gained popularity

In the previous part of this series, we discussed why the Next model is becoming more valuable to AT&T (T) compared to the traditional subsidy model. AT&T’s Mobile Share Value plan is another popular plan. It gives you shareable data for up to ten devices per account, unlimited domestic calls, unlimited domestic and international messages, and 50 GB of free cloud storage. This is mainly a family plan and it’s similar to Verizon’s (VZ) More Everything Plan.

According to AT&T, the total number of Mobile Share connections has increased from 13 million in 2Q13 to 41 million in 2Q14. In other words, the Mobile Share penetration of total postpaid subscribers has increased from 18% in 2Q13 to 56% in 2Q14, as the chart below shows. Verizon’s More Everything penetration increased from 36% to 55% during the same period.

Increasing data usage is pushing up data sharing plans’ penetration

During the conference call to announce 2Q14 earnings, AT&T’s management mentioned that it’s seeing a 50% year-over-year increase in data usage on smartphones. But as the U.S. smartphone market has started to get saturated, the connected car market is considered the next growth area for telecom companies.

Connected car functionality is part of the machine-to-machine (or M2M) market, which involves technologies like Bluetooth, GPS, and infotainment systems in the car. AT&T mentioned that it’s already partnered with various car manufacturers, like Tesla (TSLA), BMW, GM (GM), and Ford (F).

According to a report from Infonetics Research, the worldwide connected car market could triple from 2013 to 2018 to $17 billion. This will amount to a compound annual growth rate (or CAGR) of 25% between 2013 and 2018. This expected growth is much faster than the expected smartphone market growth. An increase in AT&T’s presence in this market would certainly benefit the company.