AT and T goes after high-end market with Digital One Rate Plan

Home Office Computing, Sept, 1998 by Richard Ashton

IF IT SEEMS LIKE YOUR cellular phone service provider is nickel-and-diming you to death, well, that's all part of the plan. No matter what carriers promise, there are so many additional charges for roaming, out-of-zone, and long-distance calls that you'll probably never see those low rates that lured you into the wireless fold in the first place.

AT&T is trying to cut through the confusion with a much-hyped, fiat-fee service called Digital One Rate. Although better per-minute deals are available, the simplicity of the Digital One Rate plan streamlines the mind-boggling complexity of typical cellular-service plans: Whether you're calling across the street or across the country, you'll pay the same amount--between 11 and 15 cents per minute. If you exceed your monthly limit, additional minutes are billed at a reasonable 25 cents per minute.

"We did some market research and looked at what consumers want," says AT&T Wireless spokesman Ken Woo. "We found that people want a nationwide service and a simple billing plan."

Though it does address these needs, Digital One Rate is hardly a slam dunk for all home-based workers. For starters, the cheapest plan costs $89.99 a month and gives you a whopping 600 minutes of airtime--far more than most people need. AT&T's lower-end plans still charge roaming--calls made from outside your service area--and long-distance fees, and you'll pay extra for caller ID, voice mail, and other optional services.

"Only 6.2 percent of wireless users use their cellular phones more than 300 minutes a month," according to Darryl Sterling, an analyst with the Boston consulting firm Yankee Group. "AT&T is going after a very small--but very profitable--part of the market."

That segmented group no doubt includes homeworkers who travel extensively for business and don't want to fret over making a five-minute call to a client across the country. But Digital One Rate could have greater appeal "for high-end cellular users," Sterling says. "[For them,] the AT&T plan may even displace land lines."

Because it is a digital-only plan, analog wireless customers will need to upgrade to a digital phone before they can take advantage of the low prices. And because AT&T is committed to emphasizing its digital offerings and deemphasizing its analog programs, analog devotees could take a hit over the coming years (see We Dispute in this issue).

Shortcomings aside, AT&T's simplicity factor is attractive. By comparison, a typical US West plan charges 11 cents per minute, but roaming calls cost an additional 30 cents per minute, and you'll pay an added 15 cents per minute for long-distance calls. Horizon PCS's power package offers a rate of 11.4 cents per minute with a roaming charge of 60 cents per minute, plus the confusing issue of "in-zone" and "out-of-zone" calling prices. GTE's California Plan features a $30 monthly access fee, with local calls billed at 25 cents per minute and long-distance calls billed at 99 cents per minute.

Digital One Rate allows you to sidestep this zoning and billing chaos, because AT&T sidesteps it too. While smaller companies are forced to lease cells in order to provide national coverage, AT&T owns the cells it needs to offer fiat fees from coast to coast.

Three for the Road: AT&T's Digital One Rate Plans

MONTHLY COST       MONTHLY AIRTIME LIMIT    PER-MINUTE RATE
$89.99                  600 minutes            15 cents
$119.99               1,000 minutes            12 cents
$149.99               1,400 minutes            11 cents