AT&T Learns Exactly The Wrong Thing About Data Usage
AT&T says that 65% of its users use less 200 megabytes per month; a whopping 98% use less than 2 gigabytes. (NYT) AT&T looked at these numbers and concluded it was time for tiered pricing; time to soak these “data pigs”.
I am a data pig. I average between 1.5 and 2 gigabytes a month over the last 6 months. AT&T hates me, apparently, though they are happy to take my money.
The prices are reasonable I guess; $15/month for up to 200 megs and $25/month for up to 2GB. I would take issue with the AT&T guy who is kind enough to characterize 2GB as a “stupefying” amount of data, but that would be pointless. (The extra charge to tether, which comes with no extra bandwidth however — that’s just mean.)
So tiered data pricing is great, right? Tailoring costs to usage? How awesome!
Except, except, except.
There’s just one little thing: tuning your pricing to reflect iPhone users who only consume 200M of data per month is an answer to the wrong question. Rather than ask what is the lowest point they could cheaply cap data and still make money, they should have asked: Why are so many people using so little bandwidth? Or, put another way, you should be ashamed of yourself if you sell a device like the iPhone and then encourage people use it so lightly that they only consume a couple hundred megs of data a month.
Really, AT&T (and Apple, hello!) should be dying to get people to use 1-2 gigabytes of data a month at least. The more data people use the more entrenched the phone becomes in their lives. People (like me) who stream tons of audio, randomly play online games, wish to tether, etc., are the folks that rely on the phone and blend it into our everyday lives. If you are a subscription-based service company (AT&T) or a consumer electronics company who releases new devices yearly (Apple), isn’t that kind of lifestyle integration what you want? Doesn’t that keep people upgrading phones and extending contracts? Isn’t that how you get a customer for life?
Mobile data usage exploded over the last three years, and with the iPad and coming Android tablets, mobile usage was poised to explode some more. Now, well, we’ll see. One of the great niceties of the iPhone was that you could just be unconcerned about your usage; just upgrade your apps, download your podcasts, stream your Pandora. Don’t Worry, Be Happy!
All gone. (You can bet the other carriers will follow suit as fast as they can.) Sucks to be a developer of a bandwidth intensive app, doesn’t it?
How about that Mr. Jobs, building devices that live by their effortless connectivity, knowing AT&T was going to cripple it? Had to feel good. How annoyed is Google, given the heavy usage of bandwidth intensive apps like Google Maps and Google Earth in the mobile space?
A buddy of mine commented that he was worried his wife would be listening to Pandora on her 3G iPad, mute it, and then forget and leaves the room, only to return the next day. Yeah, with AT&T’s network such connection reliability is unlikely, but still, the charges would pile up.
You do have to wonder what the Apple team is home thinking. They spend three years rewriting the rules for mobile devices only to have their exclusive carrier essentially say “We want your customers’ money, but we’d really rather they not actually use your product!”. Has to really suck to see the iPhone/iPad so hobbled by AT&T. On the other hand, given Apple’s clout with AT&T, they are at least a bit complicit, I would think.
And in the end, the tiered pricing model is bad answer to the wrong problem. It is not a problem if I use 20 gigs of bandwidth in a day, if I am the only one using my local cell tower. It is a problem if I use 100 megabytes of bandwidth in a day, if I am sharing a Manhattan tower with thousands. How does that truism relate to an overall tiered data plan? It doesn’t.
Each cell tower has a fixed bandwidth capacity, voice and data. Parcel it out so no one user can hog it. If your tower can handle 100 megabits/sec (ha!) then design for it to be maxed out, all the time, ensuring fairness. Don’t tell me about back-haul problems; that is your poor planning. But don’t charge me extra because I am using a particular cell tower at half its capacity; that’s just mean. Again.
And yes I know the wireless protocols are not super-amenable to this sort of thing, the way a wired router or switch might be, but that is again just your poor engineering. Fix it already.
I’d be less annoyed by this if the data caps were forward leaning; say $15/month for up to 1GB/month and $25/month for up to 5GB/month, but AT&T clearly really truly actually believes that 200MB/month is going to be sufficient for the majority of their customers for at least two years! Gah.
Doesn’t that just grind cloud-mobile, gaming-mobile, video-mobile, and some-really-cool-but-currently-unknown-mobile development to a halt?
Great job, AT&T: you just devalued your own product.