Why AT&T is undercutting the RIM PlayBook

It's all about data revenues, and the BlackBerry-tethered tablet doesn't boost AT&T's income

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In essence, AT&T wants to charge for each device's access separately, whether or not the device has its own 3G radio. (Verizon Wireless also charges for tethering, whereas Sprint and T-Mobile have often not charged such fees as a way to try to get more customers -- but that low-cost strategy hasn't really worked out for them.)

The PlayBook goes against that fundamental business model at AT&T: Every device pays separately for its data access. It's a line in the sand AT&T doesn't want crossed, as that would lead to reduced income. Carriers like AT&T know that prices in telecom usually decrease over time, so they do everything possible to slow down that trend and make as much money up front as they can.

You could argue, and I'm sure RIM has, that the key communications apps accessible on the PlayBook via the BlackBerry are really BlackBerry apps, so there is no increase in data usage. At first, that seems like a reasonable argument -- except that users will do other things on the tablet as well, and to do so means tapping into the 3G service the BlackBerry shares with the PlayBook. To AT&T, sharing means revenue lost.

Whether or not the PlayBook crosses that line in the sand, the device is moving closer to it, and AT&T has no interest in encouraging that trend. It's not surprising AT&T is saying no to tethering for the PlayBook as it has done to other devices. It said no to Apple and got its way -- does RIM really think it will do better?

The only surprises in retrospect are that AT&T didn't say tethering was permitted for an extra $20 per month -- and that Verizon isn't charging that premium for its users. My guess is that AT&T will "compromise" by allowing PlayBook tethering for an extra monthly cost -- if the PlayBook survives in the market, that is.

This article, "Why AT&T is undercutting the RIM PlayBook," was originally published at InfoWorld.com. Read more of Galen Gruman's Mobile Edge blog and follow the latest developments in mobile technology at InfoWorld.com. Follow Galen's mobile musings on Twitter at MobileGalen. For the latest business technology news, follow InfoWorld.com on Twitter.

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