AT&T iPhone Users Irate at Idea of Usage-Based Pricing
AT&T has hinted it will move from an all you can eat data plan to usage-based pricing to solve its continuing bandwidth woes - and users don't like it one little bit.
CIO — In less than two years, the iPhone has changed the way people think about and use their phones. As with any paradigm shift, reverberations can be felt in many ways. Wireless data usage has spiked, clogging AT&T's network.
Now signs point to AT&T possibly changing the way it bills customers, moving from an all-you-can-eat data plan to usage-based pricing.
[ The iPhone's success doesn't mean there isn't room for improvement. Check out five moves we wish Apple would make in 2010. ]
Earlier this month, Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, speaking at the UBS conference in New York, strongly hinted that AT&T will move toward some kind of usage-based pricing scheme.
"We are going to make sure incentives are in place to reduce or modify [data] uses so they don't crowd out others in the same cell sites," de la Vega said, adding, "We have to get to those [high usage] customers and get them to recognize they have to change their patterns, or there are things we will do to change those patterns."
Bandwidth Hogs?
Currently, AT&T charges $30 a month for its unlimited data plan. For many consumers, the plan works as it should. But AT&T has found that 3 percent of its smartphone users are responsible for 40 percent of total data usage, thus clogging up the network and degrading service for the vast majority.
Who are the wireless data bandwidth hogs? That's easy: iPhone owners—that is, iPhone owners ravenously download apps, video and web pages. Some even stream data all day long.
Roger Entner, head of telecom research for Nielsen, told USA Today that the typical smartphone customer consumes about 40 to 80 MBs of wireless capacity a month, whereas the typical iPhone customer uses 400 MB a month.
Bernstein Research analyst Toni Sacconaghi echoed this sentiment, saying that the average iPhone user consumes five to seven times the monthly bandwidth of the average wireless voice subscriber and twice the amount of the average smartphone user.
AT&T has responded by investing millions shoring up its network—nearly $65 million since 2008 to improve its 3G wireless network in the San Francisco Bay Area alone. The exclusive carrier of the iPhone is also rolling out HSPA 7.2 technology nationwide with completion expected in 2011.
But the problem will only get worse. The App Store has surpassed 100,000 apps, many of which hog bandwidth. Location-based services, which also consume bandwidth, are on the rise. AT&T has delayed opening up its data network to tethering, which would allow laptop computers to connect to Internet via the iPhone, because usage will spike and its data network will be even more burdened.


