Larger data buckets’ proportion has gone up
In the previous part of this series, we discussed why AT&T’s (T) Mobile Share value plan’s penetration is increasing rapidly. We also discussed that AT&T has partnered with various car manufacturers to leverage the fast growth expected of the connected car market.
During the conference call to announce AT&T’s 2Q14 earnings, management mentioned that it has about 41 million connections across 14.6 million accounts on Mobile Share plans. However, the more interesting part is that Mobile Share accounts with 10 GB or larger data plans have increased from 29% in 2Q13 to 49% in 2Q14.
Discounts are the main reason for increased adoption of higher data plans
As the chart above shows, although the Mobile Share accounts for AT&T have tripled from 4.8 million in 2Q13 to 14.6 million in 2Q14, 10 GB or larger data plans have increased by more than five times, from 1.4 million to 7.2 million, during the same period. AT&T also mentioned that of the new customers adopting the Mobile Share plan, about 70% are going for 10 GB or higher data plans.
The main reason for the higher adoption of 10 GB or larger plans is the discounts offered for AT&T’s Next customers at larger data buckets. This strategy is similar to what Verizon has also adopted for its More Everything plan. Under this plan, you get a $10 discount if you’re an existing Edge customer and your data allowance per month is up to 8 gigabytes. The discount becomes $25 for an existing Edge customer if your data allowance is above 10 gigabytes.
Increasing adoption of larger data plans benefits AT&T and Verizon by generating higher data revenues. If this trend continues, it will benefit exchange-traded funds (or ETFs) like the Technology Select Sector SPDR (XLK), iShares Global Telecom ETF (IXP), and iShares U.S. Telecommunications ETF (IYZ), which have high exposure to AT&T.