AT&T Inc plans to sharply raise prices on data plans for smartphone and tablet customers from next week, calling the move a response to an explosion in wireless usage.

The No. 2 U.S. carrier dropped a controversial $39 billion bid for Deutsche Telekom's U.S. wireless unit T-Mobile last month, bowing to fierce regulatory opposition but leaving AT&T to try and find an alternative to address its shortage of wireless airwaves.

From January 22, AT&T customers will pay $20 for a 300-megabyte monthly data plan, up from $15 for 200-mb currently. Users with higher requirements can also opt for $30 for 3 gigabytes -- versus $25 for 2 GB previously -- or $50 for 5 GB, up from $45 for 4 GB.

AT&T spokesman Mark Siegel estimates that data usage is increasing 40 percent every year, spurring the company to offer more upfront. Consumers are rapidly migrating to video and music.

The new prices affect only new customers; existing customers can stick with their current plans or upgrade as needed, AT&T said in a statement.

(Editing by Bernard Orr)