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AT&T Moves Closer To Usage-Based Fees For Data
CWmike writes "AT&T has moved closer to charging special usage fees to heavy data users, including those with iPhones and other smartphones. Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, came close on Wednesday to warning about some kind of use-based pricing while speaking at a UBS conference. 'The first thing we need to do is educate customers about what represents a megabyte of data and...we're improving systems to give them real-time information about their data usage,' he said. 'Longer term, there's got to be some sort of pricing scheme that addresses the [heavy] users.' AT&T has found that only 3% of its smartphone users — primarily iPhone owners — are responsible for 40% of total data usage, largely for video and audio, de la Vega said. Educating that group about how much they are using could change that, as AT&T has found by informing wired Internet customers of such patterns. De la Vega's comments on data use were previewed in a keynote he gave in October at the CTIA, but he went beyond those comments on Wednesday: '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.' Focus groups have been formed at AT&T to figure out how to proceed."
Claim: 3% of users consume 40% of bandwidth
Telco solution: We must charge everyone based on usage!
If they can identify 3% of people are using 40%, then by all means put a 'cap' on the fixed price service that *doesn't* affect the 97% of normal users. Charge for extra service for the offending 3%. They just use this as an excuse to slap everyone with higher rates.
People in cars cause accidents....accidents in cars cause people
Dear AT&T,
The only way to fix your problems is to upgrade your network. Stop trying to punish users. Stop neglecting your network. Stop paying Luke Wilson to beat up strawmen on TV.
If you don't get your shit together, I will be switching over to Verizon's Droid when my iPhone's contract is up.
Here on Slashdot, we really like our car analogies; it's a long held tradition. However, for your benefit:
Say a pizza company comes up with a plan where you pay $300 per month for as many pizzas as you'd want with unlimited toppings. The company goes and advertises young people calling everyday to order a new variant of pizza, all smiling, happy, little pizza consumers. The advertising is effective, and the plan takes off; people everywhere are signing up for the $300 pizza deal. But instead of ordering Pizza the way the company wants/expected of 1 pizza a week (usually single pepperoni topping), college students actually order a fully loaded pizza every day. So now, the company is trying to tell people this small number of people are making it hard to do business because of a fringe group. In reality, the company is probably still doing well because the $300 covers the actual costs, plus they have all the people who aren't ordering pizza every day, but the profit margin just isn't enough. So now, some spokesperson is saying that in light of this fringe group, they might have to add a per pizza fee for each order on top of the $300/month.
I hope this helps and functions as a reasonable analogy of the problem.
It would be just as correct to say that they found that 97% of their users are not properly taking advantage of their *unlimited* data plans. I've heard their argument with regard to home cable internet service. "1% of users are responsible for 90% of bandwidth usage". Well, when 99% of your users don't really need 6Mbps, but are paying for it anyway, they're being oversold. Those that take advantage of what they pay for are making good use of it. We need to turn this problem on it's head. Maybe automatic tiered pricing up to the unlimited plan. That would be more fair to light users. Of course, in that case, it is in AT&T's best interest to do nothing.