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iPad: Pushing More Americans to Pay More for Wireless Service

Posted by: Olga Kharif on January 27, 2010

On Jan. 27, Apple said it will soon make available a version of its iPad tablet computer able to run over AT&T’s wireless network, as long as you pay $15 or $30 a month for service. The device could usher in the era of more people paying wireless charges for multiple mobile devices.

In other parts of the world, paying for multiple mobile devices is already commonplace. In Italy, people often own several phones, one for calling and one for messaging. And Americans should follow suit. In a few years, each American will own four or five mobile devices, each of them requiring a voice or a data plan, figures wireless expert Chetan Sharma.

A small percentage of Americans already pays for service for several mobile devices. Amazon’s Kindle e-reader comes with wireless connectivity to AT&T’s network priced in. Some consumers pay monthly charges for data cards, allowing them to connect their laptops to wireless networks. The iPad, which some analysts expect to sell 5 million units in its first year, could push the idea of paying for service for non-phone devices into the mainstream. If the iPad takes off, that is.

That, in turn, could lead to the introduction of family plans for devices, an idea analysts have talked about for years. A carrier might sell you a pool of wireless minutes and data access to be used by your stable of three or four wireless devices, such as a tablet, a gaming console, a car navigation system and your phone.

Clearly, as Americans snap up more wireless gadgets that require wireless plans, carriers stand to benefit, big time. Their costs in pushing these gadgets to consumers should be low: The devices’ manufacturers will do the heavy lifting of marketing and selling the gadgets in their stores. The devices won’t necessarily have to be subsidized; AT&T won’t subsidize the iPad, Jefferies analyst Jonathan Schildkraut says in a Jan. 27 note. The carriers will likely have to share service revenues with the manufacturers, though, and those service fees may be smaller than regular phone charges. But even those fees could drive the carriers’ growth for years to come, Sharma says.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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