AT&T Cuts Data Rates To $500 Per Gigabyte

AT&T on Tuesday updated data plans for its GoPhone no-contract prepaid offering and introduced its first prepaid smartphone--the LG Thrive. The refreshed data plans slash pricing to the equivalent of $500 per gigabyte.

At $500 per gigabyte, it's the wireless carrier's most expensive plan--there's a 10MB plan for $5--but consider that previously the lowest data plan was 1MB for $4.99, which is $4,990 per GB.

AT&T dropped its 100MB plan dropped from $19.99 to $15 according to a press release. That is a mere 25% price cut compared to the 90% decrease for the 10MB plan. The carrier has also introduced a $25 plan that will buy a 500MB bucket of data. Compare that with the $45 plan for 4GB of data it sells with an iPhone, which includes tethering.

No matter how you slice it, AT&T's prepaid rates are absurdly high, but it also highlights how high its normal rates are. People tend to buy the larger data plans to ensure they don't go over, but not everyone uses data anywhere near their allotment. By locking customers into a contract, the carriers get a steady stream of income while providing more data than the average person would reasonably use month after month for two years.

By not having a contract, AT&T loses that coveted monthly repeat income so it, like any other carrier, cranks up the rates to compensate. There are setup costs for both types of users, of course, but those costs are minimal for a two-year plan. Month-to-month customers require similar setup costs, but may vanish after a month or two. Still, that doesn't justify prepaid rates this high.

Customers who prefer prepaid GoPhones would be wise to make sure they are paying the new lower rates and not the truly outrageous fees of yesterday.