After years of mounting customer outrage over its clogged network, AT&T has finally scrapped its unlimited-data plan and raised the price on heavy data users. It’s a wonder it took so long. Since the iPhone debuted exclusively on AT&T in June 2007, Apple stock has risen 110 percent, while AT&T is down 38 percent. The $30-a-month unlimited plan was designed to attract customers, and with 50 million iPhones sold, it did. But AT&T’s network was crippled as a few users hogged bandwidth: 3 percent of AT&T’s smart-phone customers use 40 percent of its data. AT&T now offers a two-tiered system: 200 megabytes for $15 a month; two gigs for $25. Use more than that, and you’ll pay extra. Network strain is likely to ease as a result, and analysts believe others will follow AT&T and that the switch will usher in a new era of (more profitable) metered data-pricing.
That could create a nice opportunity for investors. Telecoms pay among the highest dividends of any industry, with market leaders Verizon and AT&T both shelling out close to 7 percent of total investment. Generating more revenue per bit of data will help phone providers keep profits healthy even as they spend to retool around data networks and away from voice services. It may also help them weather an increasingly volatile stock market. Even if telecom share prices slip, dividends offer a nice buffer against uncertainty. And 7 percent a year is a lot better than the 3.2 percent that 10-year Treasuries are paying out. Can you hear me now?