AT&T raising charges by 33%

This is not an opinion on AT&T stock since AT&T benefits from a monopoly status in fixed line and oligopoly status in mobile telecom. But I did want to briefly flag something regarding the telecom industry and M&A.

Today I saw a Wall Street Journal article that read as follows:

AT&T Inc. is raising prices by as much as 33% for the data plans sold with its smartphones and tablet computers.

The Dallas-based carrier said that effective Jan. 22, new customers on its least-expensive smartphone plan will pay $20 a month for 300 megabytes of data, compared with the current 200-megabyte plan at $15. Smartphone or tablet users needing more data will need to pay $30 for a 3 gigabyte plan, up from $25 for 2 gigabytes.

"Data usage is increasing at about 40% a year," said spokesman Mark Siegel. "We want to give customers more data upfront."

AT&T was the first U.S. carrier to limit users’ data consumption when it set tiered pricing plans in 2010.

People have to be utter simpletons to take this account at face value. AT&T just wants to make more money. It’s not just about bandwidth. I have lived and worked a lot in Europe and like having a GSM handset for that reason, as GSM is the only mobile phone technology used in Europe. In the US that made my choice of carriers limited, AT&T, Voice Stream, Cingular, T-Mobile. Over time, these choices kept getting ever more limited because of mergers. I have been a customer of all of the major GSM carriers and can say that AT&T is not a good provider. had they been allowed to take over T-Mobile, it would have left the US with one GSM carrier and resulted in up to 33% price increases.

This case is at the heart of the debate on regulation and free markets. To me, the AT&T price hike demonstrates the power of oligopoly pricing and why regulation and anti-trust legislation is always necessary and must be used to thwart excessive market power.