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AT&T bringing back unlimited data plans for home video customers

After years of weaning customers off "unlimited" mobile data plans, AT&T (T) unveiled a new unlimited plan with an emphasis on video.

The new plans will only be available only for AT&T's 25 million customers who also subscribe to AT&T's DirecTV or U-Verse television service at home, however. And unlike the truly unlimited data plans of a decade ago, customers will actually get 22 GB of high speed downloads before AT&T slows their connection to a crawl when they use their phones in congested areas.

Video distribution is heating up as one of the next battlegrounds for the mobile industry as the U.S. market matures and customer growth slows. Verizon Wireless (VZ) launched a free short videos service called Go90 in September and T-Mobile (TMUS) unveiled a feature it called BingeOn in November that lets customers watch as much video from many popular online services without counting the downloads against their monthly data limits.

Shares of AT&T rose 0.5% on Monday after the unlimited plan was announced. Shares of Verizon and T-Mobile were unchanged.

AT&T, which spent almost $50 billion buying satellite television service DirecTV last year, plans to make a hard push to use the new unlimited plans to cross-sell its mobile and home video offerings, Glenn Lurie, CEO of AT&T Mobility, said in an interview. About 15 million DirecTV subscribers don't use AT&T for mobile and 40 million AT&T Mobile customers don't buy home video from the company, he said.

"The cross-selling opportunity for us is just staggering," Lurie said.

Not everyone will be able to take advantage of the cross-sales pitch, though. DirecTV is a satellite service that people who live in apartment buildings and other limited-sight areas can't use, and U-Verse, a more traditional cable TV service, is available in parts of 21 states.

The new plans, which also include unlimited talk and texting, will start at $100 a month for one line, $140 for two lines and $180 for up to four lines. Although AT&T will slow connections after 22 GB of data is used per line in "heavily congested" areas, the company said it won't compress or reduce the quality of video ever, as T-Mobile is doing with its BingeOn plans. An unlimited data plan customer who exceeds 22 GB of downloads in a month won't get slower speeds if they are in an uncongested area of the mobile network, an AT&T spokesman said.

The return of unlimited plans, even in the limited group of home video customers, surprised some analysts since the mobile industry has been working to eliminate the concept, which some thought encouraged overuse and caused network congestion that slowed connections for all customers. The company's overcrowded network became the subject of "Saturday Night Live" skits and competitors' scathing commercials in the first few years after the iPhone arrived.

"AT&T seems to have been doing everything possible to wean its remaining unlimited customers off the service and now it's selling unlimited data again for the first time in years," notes Jan Dawson, chief analyst at Jackdaw Research. "There's clearly an element of T-Mobile response here with the emphasis on video and the fact that the video is uncompressed."

But AT&T disputed that the new plans were a reaction to T-Mobile, saying that the deals were part of a strategy to leverage its investment in DirecTV, plus another $418 billion spent last year on additional spectrum rights. "Please don't compare this to BingeOn," Lurie said, emphasizing the cross-selling opportunities. "It's nothing like it."

Update: Customers on the unlimited data plan will not suffer from slowed downloads unless they are also in an area AT&T considers "heavily congested."

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