AT&T Ends Tablet Subsidies


A host of research reports demonstrates that people use tablets mostly at home, as a second screen in the living room or shared household device otherwise. That means tablet users are typically going online via home Wi-Fi connections, rather than through separate, expensive mobile data plans.

Given the difference in how people use tablets in contrast to smartphones -- and the rise of share data plans -- it appears that AT&T is ending subsidized pricing for tablets. Tech blog Engadget just published an internal document indicating that the carrier will begin selling all its 3G and 4G tablets at full price -- doing away with contracts as well.

The Verge confirmed the move with store representatives from two AT&T retail representatives, who told the tech site that all tablets are now being sold at their unsubsidized prices. The tech site points out that since the category-leading iPad has always been sold contract-free, the step will not necessarily have an immediate impact on sales.

The only other tablets that AT&T's Web site offers on its Web site are the Pantech Element, the HTC Jetstream, and Samsung Galaxy Tab (refurbished).

"Tablets are primarily an iPad market right now. Unlike the smartphones, consumers are comfortable paying $500-plus for an iPad, and just sign up for cellular data when they need it,” said mobile consultant Chetan Sharma. “So a subsidy-enabled tablet market is fairly small, at least right now. In the future, there might be opportunities to bundle devices and plans more effectively.”

AT&T did not respond to a media inquiry Monday about dropping tablet subsidies. But the change follows the company's planned rollout of Mobile Share plans, which will allow customers to add a tablet to a shared data pool for only $10 a month. The Verge also notes that it comes after a similar step by Verizon Wireless to offer all of its tablets and netbooks on a contract-free basis only.

Apart from AT&T's shared data plans, the carrier has lowered data pricing for tablets by $5 a month, since subscribers will no longer be paying off subsidies. AT&T is now charging $14.99 for 250 MB of data, $30 for 3 GB, and $50 for 5 GB.

In the second quarter, the company reported adding 219,000 tablets, about three-quarters of which were on a contract basis.

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