[opendtv] AT&T sounds deathknell for unlimited mobile data
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 10 Dec 2009 09:16:10 -0600
Wow. It will be difficult for 4G to become a generic wireless broadband "last
mile" link in the future, if they can't emulate wired broadband pricing models.
I don’t see how the cellcos can go back to ancient telco pricing models. I
don’t believe it.
Bert
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http://www.rethink-wireless.com/article.asp?article_id=2239
AT&T sounds deathknell for unlimited mobile data
By CAROLINE GABRIEL
Published: 10 December, 2009
The end had to come - it's been increasingly obvious that flat rate, unlimited
mobile data plans, often at cutthroat rates, were becoming unsustainable, for
the carrier's creaking networks and for their profitability. The trend will
start to reverse in 2010, forcing customers to pay premiums for high usage or
optimal quality of service. Already, cellcos like 3 and Vodafone are using
tactics such as deep packet inspection to curb excessive usage or certain types
of traffic, or to deliver tiered levels of QoS, for differentiated tariffs. Now
AT&T, whose problems with supporting the smartphone data flood on its 3G
networks have been most highly publicized, has tolled the death knell for
all-you-can-eat.
The cellco has not yet gone as far as a return to usage-based pricing, or a
tiered tariff plan, though many observers think it - and its rivals - will have
to do this in future. For now, it is mainly focusing on incentives to customers
to rein in excessive data use. This highlights the carriers' dilemmas. They
have set expectations of cheap, unlimited data, which will now be hard to
change without user dissatisfaction and churn (especially if a rival with a
better network, perhaps like Sprint/Clearwire, can stick to more attractive
deals). And they know their hold on their subscribers is too tenuous to engage
in unsubtle sticks like data caps or cut-offs, so they need to present their
traffic curbing measures as benefits to the consumer - an increased quality of
service for a small premium, or a carrot to reduce usage.
At an investor conference in New York yesterday, Ralph de la Vega, AT&T's head
of wireless, said the operator was considering such incentives to get consumers
to reduce their data usage, with 3% of smartphone users now consuming 40% of
network capacity.
"We're going to try to focus on making sure we give incentives to those small
percentages to either reduce or modify their usage so they don't crowd out the
other customers in those same cell sites," he said, though he was short on
actual details of how this would be achieved.
Some of it will be down to increased awareness and education, since many
consumers are unaware of which apps are bandwidth hogs. "What's driving usage
on the network and driving these high usage situations are things like video,
or audio that keeps playing around the clock," he said, according to the AT&T
transcript. "And so we've got to get to those customers and have them recognize
that they need to change their pattern, or there will be other things that they
are going to have to do to reduce their usage."
He also hinted at usage-based pricing in the future. "I think longer term,
there's got to be some sort of a pricing scheme that addresses the usage," he
said. "But that's going to be determined by industry competitive factors,
regulatory factors and customer successes."
At its own investor conference, Sprint Nextel was addressing the same issues.
CEO Dan Hesse commented: "When you think about postpaid .... it's not just
going to be your phone. It's going to be your camera, your iTouch, your gaming
device - they're all going to become wireless, so what's going to be the right
plan for those? As we move into 4G, it'll be much less about minutes and more
about gigabytes as the main driver of what customers are buying per month,
because it's going to be VoIP oriented. Minutes will be largely irrelevant."
He added: "We want to have the flexibility - in wholesale and retail, prepaid
and postpaid, with multiple brands - to move and morph, because business models
are going to change…The biggest growth will come from non-traditional
wireless devices." This is one of the key benefits of Sprint's close
involvement in Clearwire, which offers a greenfield, all-IP, high capacity
network that is better suited to supporting multiple business models, and
flexible usage/charging models, than those systems created primarily for voice
and the walled garden. However, Hesse would not be drawn by a question on
whether Sprint would eventually seek to buy out Clearwire. The network, in
which Sprint is the largest stakeholder, is the cellco's best opportunity to
get back into the high value mobile game, and to outflank the big two in terms
of network capacity and therefore QoS, new apps and flexible tariffs. Verizon
Wireless will be next off the blocks with a 4G network geared to the same
benefits, though the CDMA carrier has less spectrum to play with.
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