) and Verizon (
) both have the iPad and are sparring over data customers. These
two compete with Sprint (
), T-Moble and smaller carriers like Virgin in the mobile business.
AT&T's other business lines include broadband, pay-TV, landline
phone and business services.
Our price estimate for AT&T stands at $35.80
, well ahead of market price, and we estimate that AT&T
generates roughly 50% of its equity value from mobile phones and
Given that the mobile phone penetration in the U.S. is already
approaching saturation levels and will trend more or less with
population growth in the future, incremental growth for telecom
providers like AT&T will come from newer devices like tablets
and other connected devices. We previously wrote an article about
Tablets Provide Upside for AT&T as Mobile Market
The impact of these changes can be gauged by modifying the chart
This is where tablets can give these companies an edge. Goldman
Sachs expects tablets to grow by 224% in 2011 compared to just 6%
growth for the total PC market and expects tablets to cannibalize
about 35% of notebook sales. In a report from last summer,
Forrester predicted that it expects tablets to overtake desktop
sales in the U.S. by 2015. Though this presents opportunity for
companies like AT&T, it will have to fight off Verizon to truly
capitalize on it.
Verizon and AT&T both carry the iPad and iPhone. The
recently launched iPad 2 is stirring up fresh competition on which
carriers customers will choose.
Stacking up the iPad 2 Plans
AT&T and Verizon are both offering tiered data plans that
have some subtle differences. Both seem to have different data
tiers and AT&T offers both pre-paid and post-paid plans while
Verizon is only offering pre-paid.
A brief look at the iPad 2 data plans suggest that Verizon is
offering more tiers of pricing to accommodate different levels of
usage. However, not all customers know what they want and how much
data they will consume, especially if this is their first iPad or
connected mobile device.
Below are some observations from the comparison:
- Consumers with very low data usage, especially those who
would like to use iPad 2 for just light web surfing without any
high media consumption like videos, are likely to go to
- Users that tend to reach around 1GB of monthly data usage
will be better off at Verizon
- Consumers who tend to use monthly data of as much as between
1 GB and 3 GB will prefer AT&T
- Data usage of 3GB to 4GB leads to a neutral choice between
the two carriers
- Anything higher than that, Verizon's plan is preferable
Ultimately it boils down to the question of how well can users
predict their data usage.
Very heavy data users have an advantage with Verizon, but that
does not mean that users will switch to AT&T automatically.
AT&T is allowing its existing customers with unlimited plans to
grandfather this data plan when they upgrade to iPad 2!
While is seems both plans have their positives, AT&T has an
easier plan and will retain customers who are nervous to try
something new and get upgraded to iPad 2 with the same plan.
You can see
the complete $35.80 Trefis price estimate for
AT&T's stock here.