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Why AT&T Should Dump the iPhone's Unlimited Data Plan
Pickens writes
"Farhad Manjoo has a provocative story at Slate asserting that while the iPhone has prompted millions of people to join AT&T, it has also hurt the company's image because all of those customers use their phones too much, and AT&T's network is getting crushed by the demand. The typical smartphone customer consumes about 40 to 80 megabytes of wireless capacity a month, while the typical iPhone customer uses 400 MB a month. As more people sign up, local cell towers get more congested, and your own phone performs worse. He says the problem is that a customer who uses 1 MB a month pays the same amount as someone who uses 1,000 MB, and the solution is tiered pricing. 'Of course, users would cry bloody murder at first,' writes Manjoo. 'I'd call on AT&T to create automatic tiers — everyone would start out on the $10/100 MB plan each month, and your price would go up automatically as your usage passes each 100 MB tier.' He says the key to implementing the policy is transparency, and that the iPhone should have an indicator like the battery bar that changes color as you pass each monthly tier. 'Some iPhone fans will argue that metered pricing would kill the magic of Apple's phone — that sense of liberation one feels at being able to access the Internet from anywhere, at any time. The trouble is, for many of us, AT&T's overcrowded network has already killed that sense, and now our usual dealings with Apple's phone are tinged with annoyance.'"
Build more towers. Increase capacity. Uncle Sam has doled out a lot of money over the last couple decades to build infrastructure. Build it. Cut dividend payouts a little bit, and build the infrastructure up. Maybe cut executive and management pay a little bit. DUHH. And, while you're at it, maybe you can get that "last mile" built so that all Americans can get online. Tiered pricing isn't the solution. Demand is going to increase every year from now on. Get used to the idea that you need to keep adding to and improving the infrastructure. You can't take a snapshot at some arbitrary point, and say "We need this much more infrastructure, then we'll be on easy street." Invest your earnings back into the system, where it belongs - in the business.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
AT&T also scored lower than any other U.S. carrier in a recent customer-satisfaction survey—the first time it has ever claimed last place.
That's not the iPhone users fault: that's AT&T fault.
What's this horseshit of blaming the customer for shitting customer service, or service for that matter?!
They sold a service and an amount of bandwidth and now that they can't deliver, they're blaming the customer.
It's NOT me! It's the meds! I'm on 1000mg of Fukitol.
ATT offered users an unlimited data plan, no wait, they required one with an iPhone. Now the problems with ATT's network are the fault of those selfish users who took ATT's offer seriously. Give me a break. ATT is rolling in money from iPhone, they should use it to build out their network.
And the money to expand this supply, which is now in the pockets of overpaid Apple, would have gone to the carriers. The traffic would have distributed because consumers would react to lower service levels and changed to other carriers, and when the system is balanced the pressure to expand and innovate is also balanced. Instead of, as in this case, creating a cartel in which both AT/T and iPhone deserves any shit thrown at them. And before anybody answers, NO this is not business, there are rules to business and if you cannot understand that then fuck off. Unfortunately I'm posting Anon due to the fucking Macibans infecting slashdot who mod down Apple criticism even when it's true.
As a great man [allegedly] once said, 640kb should be enough for anyone.
Modern users with their demands for eight, sixteen and thirty two megabyte options are just needlessly draining the world's silicon supply so they can listen to a few songs. Traditional phone users who don't have all of those cutesy multimedia options can get by with a fraction of that.
Alternatively, time moves on. Just because 640kb was once enough for anyone, doing what they did with the limitations of that era, just because 40-80mb/month was once enough for anyone... That doesn't mean time doesn't move on and it doesn't mean it's appropriate to only support what once was the norm.
AT&T have made a metric assload of money from people who bought the iPhone for, well, being an iPhone and not "some other" smartphone. AT&T's network sucks, just about everyone seems to gripe about it. They suck it up, when they'd never have gone with AT&T in the first place, because it does come with a more able phone, because it does come with unlimited data access, because it does come with an interface that makes using 5-10x as much bandwidth as before a practical reality.
To play bait and switch, to get users to buy $600 phones (yes, I'll claim full price in a world where you either pay inflated monthly rates or a fee to cancel), to get them to sign up for those contracts, to get them to leave companies with more reliable service, all with the promise of an unlimited phone and then to say... yeah, we don't feel like paying to support that so, instead, surprise! we're capping the unlimited service we sold you and charging overage fees is obscene.
If AT&T can't really roll out coverage to support iPhone users using an iPhone as an iPhone... perhaps the real answer is for Apple to say, "OK, you can't meet your end of the agreement - we'll sell it to Sprint/Verizon/whoever instead."
AT&T entered in to an agreement with Apple to provide a network that supported Apple's product. AT&T entered into an agreement with the customers to provide a network to support that product in a certain way, too. If they'd like to acknowledge they can't honor that, I'm sure another company would like the opportunity.
I agree, and that's exactly what users will start doing themselves if there ever is a data cap on the iphone's 3G. The thing is, it's a bit of a scary scenario for AT&T, because once communities gather with ad hoc, consistent wifi network coverage, people will want to scale back their GSM data use and buy the cheapest plan available, or maybe even a voice-only plan.
Apple will be forced to drop that exclusivity deal, once Android starts kicking ass and taking names in 2010. With Sprint and Verizon both rolling out multiple Android phones Apple can't afford to stay tied to a crappy network.
Go Illini!!!
Really, how could AT&T not have seen this coming? Having attempted to surf the web on other phones, on an iPhone, while it is not perfect, it is at least functional. And guess what? More people will surf the web when they get an iPhone. When AT&T promoted that phone, more users that will tax their infrastructure. Unless someone at AT&T was praying that people would get the iPhone and not use one of the most useful features about it.
Well, there's spam egg sausage and spam, that's not got much spam in it.
While the logic is sound, his basic premise is quite flawed. His article is based upon the idea that these "iPhone Users" are something so different and special from other phone users, that the world has never seen anything like them before (sounds like a bit of Apple propaganda to me). However, that is patently wrong. Just look at Japan. A very large percentage of the Japanese population uses their cell phones in ways that would put iPhone users to shame. That is not even mentioning that Japanese cities have much higher population densities than American cities, and you don't hear stories of how the Japanese phone network is falling apart. Between these two points, his conclusion that we will never be able to build enough network capacity to support iPhone users is clearly false.
iPhone is just the most visible because it can be equipped with all sorts of apps that actually work as advertised most times, and people actually use them. If [fill-in-the-blank-other-carrier] supplied an equally useful product, their network would get hammered too.
Personally, I would say the topic of this article hasn't really affected me and I travel a lot. My iPhone on AT&T works at least as good as my previous Blackberry 8830 and Treo before that did on Verizon. The aircard for my laptops consistently works better than the Verizon one did. The only time I've seen crappy data rates is usually at/near an airport where a zillion other people are connecting to the same tower as me. Not too surprising and not worth the effort to whine about.
The writer builds his entire argument on the idea that, like highways, building network capacity produces a phenomenon called "induced traffic". The more roads you build, the traffic they attract, producing an unending(but not really) cycle of expansion and congestion.
Setting aside the obvious dissimilarities between network traffic and highway traffic, what he fails to mention is that there's an upper limit to induced because, as usual, there are a finite number of people and cars. If it really was the case that highways inevitably congested no matter how many you build, all of our highways - not just the ones outside of major metro areas during rush hour - would be chronically congested, at all times. But they aren't. This is because there is an upper limit on how much people drive no matter how many highways are available for them to use, and there is an upper limit on how many people drive to begin with.
Similarly, the Internet would have grinded to a halt long ago if building out capacity wasn't at least a partial solution, if not a complete solution, to the problem. Most broadband users have unlimited access as well, and while some tax the network disproportionately, the Internet's infrastructure is able to support it.
Why the author thinks the same principle doesn't apply to iPhones is beyond me. Yes, people will do more data-intensive things on a faster network. But there's an upper limit to how much data can be transferred by a single iPhone user in one month anyway, even if the user is transferring data 24/7, 7 days a week. if the network is built to handle the upper-limit of the most data-intensive users even in a hypothetical "induced traffic" scenario, this won't be a problem.
The whole traffic analogy belongs in the "The Ted Stevens Dumptruck of Bad Analogies," and Slate should stop publishing articles about shit it doesn't know about.
source: http://www.companypay.com/executive/compensation/at-t-inc.asp?yr=2008
Total compensation of the five active execs listed for 2007 $59,359,833.00
Source: http://www.celltowerinfo.com/faq-4.htm
cost to build a tower $100,000 - $300,000
so I'll take 200k as an average
source: http://www.google.com/search?hl=en&source=hp&q=59359833%2F200000&aq=f&oq=&aqi=
number of towers that builds if they take NO PAY AT ALL- 296.799
source: http://en.wikipedia.org/wiki/United_states_of_america
surface area of the US 3,794,066 sq mi
source: http://en.wikipedia.org/wiki/Cell_site
range of a cell tower gsm 25miles otherwise 30-45 miles..
lets say 40 miles-- be generous
source http://www.onlineconversion.com/shape_area_circle.htm
area of a circle using 45 as the radius= 6361 miles
http://www.google.com/search?hl=en&q=6361%2F3794066&aq=f&oq=&aqi= .00167656546
6361 into the size of the USA
you've taken away 100% of their compensation, and added 1/10 of one percent of the towers needed to blanket the nation
every day http://en.wikipedia.org/wiki/Special:Random
A company is selling an "unlimited" plan and can't handle unlimited usage? How dare you suggest such a thing. That is blasphemy against Capitalism at its highest. No company would ever stoop to such lengths as offering more than they can handle in the hope that people won't use it. That just wouldn't be proper, even if it did increase profit in the short-term.
Next thing I know you'll be telling me that all of those "unlimited" broadband connections aren't unlimited, and that my $2 per month "unlimited" hosting account won't really let me host unlimited files with unlimited bandwidth!
Don't make me say this again.
iPhone is just the most visible because
It's the most visible because it's the only one that gets advertised by the media. I mean seriously - I used to joke about daily Iphone stories, but today we have, what, at least three on the front page? Where's the coverage for the big names like Nokia? Of course it's the most visible - but sales figures show a different story. And a good thing too, as I for one don't want the future of mobile computing to be a monopoly like we ended up with Microsoft, but worse one that's locked down to the extent that you can't even release an application without Apple approval.
Personally I'd much rather to see a future that continues with multiple companies (of which Apple can be one), with choice, and most importantly, compatible standards so that I can release an application that Just Works on all phones, without needing me to recompile it especially for each make, or getting corporate approval from the companies. I don't see why this is so controversial - and why Slashdot of all places is supporting the Iphone all the way.
Once upon a time, this was a place to support open and alternative solutions, not to give coverage and free advertising solely to large companies with locked down products!
Note that all phones can run so called "apps". Running applications on phones has been common on all but the most basic phones for at least 5 years, and note that the market of Java smartphones is estimated at two billion.
I'm not a hater. That's just another deceitful trick put out: that if someone uses another phone, disagrees that the Iphone is the best phone ever - or disputes claims that the Iphone is the best selling phone out there - they must be doing so out of an irrational hatred (e.g., the story about Japan hating Iphones).
By all means let's have a sensible debate about which phone is the best, or argue about how many phones are sold by which company. But please, let's have a fair debate, with evidence - rather than resorting to the usual tactic of branding people "haters", or modding people down out of sight simply because you disagree with them, and can't respond to their criticisms.
You're ignoring population density- the vast vast majority of iphone users are urban. Blanket those 300ish towers in the op 20 metropolitan areas and your problem is 99% solved.
I still have more fans than freaks. WTF is wrong with you people?
Your math is totally off.
3,794,066 sq mi / (6361 sq mi / tower) = 596 towers
596 towers * 200,000 $/tower = $119,200,000
So the top five would have to go without pay for two years in order to theoretically blanket the US. Of course, since the coverage of a tower is roughly circular, and circles don't tesselate, you'd actually need a lot more than 600 towers. However, for the pay of the top five execs, you could build about 300 towers.
I don't know if iPhone users really cause anything to run slower, or if this is just a myth put out to shift blame. My iPhone runs plenty fast over the cell network. What I do now that iPhones users pay for the bandwidth.
If a change is to made, then it needs to be made simpler. Realize that the iPhone may not be used as a phone, and therefore selling a voice plan as the basis may serve the customer. Or combine voice and data. One MB and one minute are perhaps the same thing. Sell 1000 units at the same cost as the basic package now. Get rid of charging for texting. I bet more people would text and not email if texting were cheaper.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
I think the real solution here is to end phone exclusivity entirely. At the moment, all AT&T has to do to attract customers is to simply be selling the iPhone. There is no incentive for them to do anything else. If phone exclusivity were to end (I'm talking about ALL phones, not just the iPhone) then carriers would be forced to compete based on their *gasp* service rather than the devices they've paid enormous amounts of money to have exclusive (and of course pass those costs onto us). Of course this is never going to happen but it would be beneficial to everyone involved.
I personally have never had any trouble with AT&T's network though I've heard lots of horror stories in more populous areas like New York City or LA. At the moment I'm still using an original RAZR since no cell phone manufacturer seems to want to make a good smartphone for AT&T seemingly because they'd have to compete with the iPhone.
As a Brit now living in the USA, it continually amazes me how Americans 'understand' or even even agree with corporations consistently crappy service (20 minutes on hold anyone?) even when they aren't getting what they clearly paid for up front.
Yet more costs to customers? No! The blame lies with AT&T. The proper solution is for AT&T to spend some of their massive profits gained from iPhone sales and contracts on better infrastructure and provide what they already promised as a part of the contract.
That /would/ be the Apple way, just like OS X on laptop. "Latch on opportunistically to any Wifi network in range, regardless of any authorization to be using it or not". Sounds like a plan - instead of you and AT&T figuring out a solution to the "problem", the rest of us can just subsidize it for you. Yay us!
3. Feds establish rate limits for services. Data access would not be unlimited, but rates should be limited to $.05 per megabyte. Voice access rates should be capped to $15 per 1000 minutes per line.
Data is not a commodity, data is a service
When I go and buy a jar of salsa, the manufacturer had to pay a specific amount of $ to manufacture that specific jar. If I do not buy it, he can keep it around and sell that jar to someone else tomorrow.
When I want to park in a parking space for an hour, however, the city does not have to pay someone $ to create an hour in which I could park. If I do not park there, then the city cannot keep around the hour I was going to buy and sell it to someone else.
In fact, if the city had magical parking meters that would safetly and immediately eject the car of any non-paying person immediately as soon as someone with a quarter wanted to park, the city could just let non-payers park there as much as they wanted, with the understanding their car might not be at the same location when they got back.
The city would be foolish not to do this, as the parking meter is just there to make sure that someone going to the store on that street (say, to buy a jar of salsa) can find someplace to park. While magical parking meters don't exist, this IS how bandwidth works on the internet.
Unless your ISP is a drooling moron, they are NOT paying per-kb, per-mb, or any real per-use fee at all. They signed an agreement with backbone providers to get a certain amount of bandwidth for a certain amount of time, and they don't pay any more for bandwidth on an hour when NO ONE uses their network than they do for the busiest hour of their year.
If AT&T really wants to keep bandwidth responsive, they want to decrease the effect that heavy users have on their network. The cheap way is to just lie and charge those heavy users more -- but that's not the right way. The right way would be to set a self-tiering structure, where so much network activity over so long just puts a heavy user's requests at a lower priority than the lighter user who pays the same amount.
Letting heavy users voluntarily pay more to get faster service would be a great revenue model, too. Especially since it wouldn't be in danger of the FCC declaring it unlawful.
Yes, seize it all and regulate it even more. This will be the key to our salvation.
/sarcasm
On the real though, they should get rid of the assignation of wireless spectrum and allow a truly free market for wireless voice and data service to grow. It's not that hard to make sure one's service doesn't interfere with the next. Rather than giving out monopolies over spectrum let the courts handle disputes where one company is directly interfering with another's.
ummmm...i like my CDMA rev A devices.... you can buy my new 800$ phone.
I pay ATT each month for a data plan. I do not use anywhere near what I pay for. Most of us do not, so we are subsidizing iPhone users.
I have considered dumping the plan, but the few times a month I use it, I need it.
I would be more than willing to sign up for a pay as you go plan, especially since I would likely be in the lowest usage tier. Let the heavy users pay the heavy freight.
Pay as you go is far more fair than the socialist model used now, where the greedy get a free ride on the backs of others.
I find it amazing that, in a system without data usage limits, 400MB is considered heavy. I work in an Optus shop in Australia, and we sell several different iPhone contracts, the highest of which comes with 2GB of data, and you can pin on another 1GB as an extra cost; I have seen people come into the shop to pay bills where they have exceeded the 3GB, month after month. I know this is just anecdotal, but it would suggest that usage limits encourage people to use all of what they pay for, and then some. Imposing limits on a previously limitless system, apart from angering customers, may actually increase traffic.
Admit it. You post strawman arguments as AC so you get modded Insightful for refuting them, rather than Troll
"Yes, seize it all and regulate it even more. This will be the key to our salvation. " - go ahead and tell me how well "the free market" is working to fix this problem.
You know, tiered pricing seems fair enough given the realities of wireless technology, but any tiered system has a top tier, and that really, desperately, needs to be unlimited.
"If unlimited data is $30 but 1Gb/month is $15 then the average iPhone user is saving money, on the other hand if instead the pricing was $1/Mb obviously the users would be losing."
I see both sides of this. You're right that if the metered usage is *reasonably* priced, then it's usually a pretty good deal. Right now, I'm doing pay-as-you-go "metered" wireless from T-Mobile for my phone (it's only voice, btw, no data). Before discussing the T-Mobile pricing, let me mention that before that, I was on a month-to-month plan with Verizon. I was paying $45/mo (the price was nominally $40/mo, but there were various bs fees, plus if you used 411 they charged you like $1.75 or $2.00 - something outrageous (thank goodness for 1-800-goog-411). That package gave me 300 'anytime' minutes, plus the normal 'unlimited nights after 9pm, and weekends'.
Thing is, my usage is not 'normalized'. That is, I don't make the same amount of calls every day/week/month, or talk the same amount of time every call. So, one month I might use 100 minutes, and the next month closer to the 300. One month I went 100 minutes over - 400 minutes instead of 300. That month, my cell phone bill ended up being something like $120 instead of the normal $40 (the extra minutes after 300 were billed at something like 45c/minute).
With the T-mobile pay-as-you-go, if I buy $100 of credit on the phone, I get 1000 minutes (or 10c/minute). The minutes last for a year (but only when you buy at least one $100 credit per year; otherwise they will typically expire after a month or three months, depending on how much you bought) Now, if I was going to talk 1000 minutes or more, every month, I'd maybe do better with an all-you-can-eat plan. So, that is one lonely example of a relatively *good deal* with metered payment. I never pay outrageous overage fees when I talk more than 300 minutes a month, I don't 'waste' minutes months I talk less, and I'm paying a relatively affordable rate for phone service (in my case, with the pay as you go, I'm paying an average of about $30/mo).
BUT, here's the important point here - T-Mo not withstanding, the mobile phone industry has a horrible track record with most 'tiered pricing' schemes. For the most part, with the mobile carriers, customers who wish to talk less minutes per month get charged *a lot more per minute* than customers who are in the higher tiers (I mean, you expect there to be *some* price difference, but sometimes the difference is astounding). Applied to data, I'm afraid the mobile industry really tends to screw their customers.
Check out this ATT page for laptop-dongle 3G data plans.
Notice how for a 50% increase in monthly cost, they give you an allocation that is approx twenty five times more data (200MB vs 5 GB, at $40/mo vs $60/mo). About a year ago, when I checked that page, they used to have one *lower* tier which was like $30/mo for 20MB or something. My point is, that the mobile industry likes to force people to spend more by making the 'lower' cost packages so ridiculously overpriced on a per-unit cost basis, that it's impractical. I mean, it would be *very easy* to go over your 200MB/mo allotment on your data plan. So, let's say you accidentally use 400MB one month (maybe some program is using your bandwidth and you don't realize). At $10/100MB, that means you payed $60 that month - the same price as the person who gets 5GB, but you only used 400MB. God forbid you use a Gigabyte one month, and end up paying $40 + (about)$80 = (about) $120 for the 1000MB.
To most of us, when you talk about metered pricing with telecoms companies, that's what we think of - getting slammed with unexpected phone bills that are God-aweful overcharges.
People "like" the monthly plans because, even though they are expensive, EVERY MONTH, it means that they are not likely to get any month that is 2-3 times larger than a normal month's bill. They can basically fix, budget for, and know what they will be paying.
There are 2 key factors being ignored here. The average user may well be using only 400 megabytes but the "average" user hasn't had his/her iPhone for very long and quite probably hasn't discovered all the possibilities yet. Someday, he/she will. He'll start syncing his files via Dropbox, or he'll set up a Pandora station and start listening to streaming audio over long car trips. He'll pick up new podcasts, and update them over the air. The longer you have your phone, the more bandwidth you'll use as you slowly learn to do more and more things with it, get more and more apps, and so forth.
A large percentage of the so-called "heavy users" are merely early adopters, who've embraced smart phone computing to a higher degree. They aren't the norm now, but increasingly they will become it.
Moreover, the average user lives where, exactly? Some cities have ubiquitous WiFi, others, as of yet, do not. Some cities are dense and have many access points, others are spread out and suburban.
At the end of the day, tiered pricing would be a disaster. People would find their bill increasing 10 dollars every month and realistically, how long would they put up with that? I love my iPhone but I am absolutely not paying 200 dollars for data every month just because I go through about 2 gigs of data in that time frame -- nor, frankly, am I willing to cut back. I'll simply switch to another phone on another network that isn't heavily oversold and underserved.
GSM is garbage - the standard is old and outdated, which is why most US carriers, including the CDMA guys, are moving forward to LTE anyways. And they don't need government mandating anything - the industry is moving towards this on its own.
The rest of your post sounds reasonable, although I highly doubt your proposals are politically feasible. I do really like the "no roaming" bit, although I wonder if it will look like utility deregulation, where the benefits to the public never materialize.
Not meaning to be argumentative, but I think it's important to bear in mind two things that may affect how well your parallel with flying aircraft works for driving whilst talking on a hands free phone. The first is that pilots are, well, pilots. You go through a lot of training to become a pilot, especially a professional one. I'm sure there are better and worse pilots, but they're all pretty qualified people. I'm not sure you can translate that to the general mass of car drivers. Pilots have had the bottom quartile removed in a way that motorists haven't. Secondly, in a similar sort of way, flying a plane is, well, flying a plane. You know you're in a serious situation and you're concentrating on what you're doing. A car driver should be doing that but typically, let's face it, is not in the same headspace as a pilot landing a plane. And the conversation that a pilot is having is about what you're doing as well. You're not talking about work or sex or plans for the night (I hope), you're listening for information that will tell you whether it's time to pull up or lower the landing gear or whatever. Your attention, even if monitoring different sources of information, is on the task.
I mean, you're the pilot, so correct me if I'm wrong, but these are things that occur to me. And don't base it on whether you can "walk and chew gum" at the same time, base it on whether you know anyone who can't - I think most of us do!
Aide-toi, le Ciel t'aidera - Jeanne D'Arc.
Fascinating how your sig refers to liberty yet you propose to take away the liberty of those who don't do things how you want them to do it.
Football without referees is usually called a riot. Although if it's that American thing they call football and you take away the refs, well, you get soccer.
That actually brings up another good point, though feel free to correct me if I'm wrong--I am not a pilot and you obviously are.
The communication with ATC, from what little I know of flying, isn't really much of a "conversation." They tell you things and you acknowledge. You tell them things and they acknowledge. Short, curt, direct, and to the point. Not a whole lot of "Hey, ATC, what are your plans for the weekend?" type of stuff.
So these are brief messages which are informational inputs. When ATC says that you are cleared to land on such and such runway, the response is "Roger." Not a lot of dialog going on.
I think there's a difference between doing alot of tasks simultaneously which accomplish a singular goal and attempting to accomplish two goals simultaneously. Landing an airplane means keeping up to date with a number of different things going on inside and outside your airplane. In the case of cell phones and driving, however, it's usually about accomplishing two different things (eg, maneuvering through traffic while simultaneously talking to someone about what's for dinner).