AT&T Learns Exactly the Wrong Lesson About Data Usage
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You pay a minimum monthly price up to a certain cap, and any usage over that cap scales your total bill linearly up to a maximum total bill, beyond which your usage is effectively unlimited. The minimum is about $15 and the maximum is about $50. Not exactly going to break the bank, and totally reasonable.
Metered usage is not evil, people just need reasonable assurances that their bill has a safe ceiling.
Verizon requires a $60 plan for tethering, even if you use very little and restricts it to 5GB (pay twice as much for less bandwidth). This scaled pricing would allow you to tether and pay little if you use little. Obviously, there are ways around this, if that's your thing.
Docomo and Google have done very little to promote Android here, by the way. In one year I've seen one device other than my own, and it was the same model (the HTC Magic, one of the few models you can get).
Great network here for voice and especially data, but it mostly goes to waste.
The current values in the scale are clearly a bit antiquated, but the concept seems like a good one.
While they're not a cellphone carrier, they are highly competitive when it comes to ubiquitous wifi.
As to those who are wondering why they have to pay extra for tethering, are you really surprised that a company would charge more for a service that you value, which will result in heavier usage of their resources? How many Hacker News readers run web companies with "freemium" business models? How do you sleep at night charging your customers for only twice the number of accounts/downloads/records that you give away for free to others?
If it results in heavier use, they should just charge for the use directly, not micromanage how I use the service. In the freemium scenario, it would be like charging extra to be able to access the website from more than one computer. Both are stupid because both require nothing to "support"; they inherently work as part of the existing infrastructure. On the other hand it does take resources to try to block that functionality, because you have to actively look for "cheaters".
When you sign up for a 2GB per month plan with AT&T, they are counting on the fact that you won't actually use that 2GB, because for most users, it's just too hard to suck down that much data through your smartphone (especially if, like me, you're roaming onto a WiFi network at home and the office). When you use tethering, you're pretty much guaranteed to use more of that 2GB.
When you go to an "all-you-can-eat" restaurant, you do know that they don't actually expect you to eat until you get sick, right? If every customer did that, they'd probably have to raise their prices.
Maybe people just don't like being lied to?
Announce a US$50 per month femtocell subsidy for anyone who installs an AT&T femtocell in their house in targeted neighborhoods.
I'm not sure how that helps the point the author is trying to make, as he/she will actually be paying less now than they were before, even as a self-proclaimed "data hog".
A few more random points that I thought were misguided:
1. Not everyone should be attached to their phone like many of us are. Perhaps Apple and AT&T have done some market research and concluded that some people just aren't going to pay more than $15 / month for data, because they just wouldn't use it much. Better to offer those people a path to becoming customers than mindlessly trying to turn them into consumers of a service they don't want or need (expensive unlimited bandwidth).
2. It will apparently be possible to retroactively upgrade from the 250 MB plan to the 2 GB plan if you're going to be over, so the fears of forgetting that you left Pandora running and paying hundreds seem to be a bit unfounded.
3. The part where the author rants about how the entire wireless infrastructure should be overhauled so he/she can avoid paying for metered bandwidth really goes off the deep end. Like this gem:
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.
What?
You spend this money on this awesome device that does awesome things, Apple makes money when you use it (via iAds, via google searches, via many things) and AT&T is saying to their customers "don't use your device too much!"
I'm betting Steve is totally pissed off at AT&T right now.
The only thing data caps do is generate more money for the provider by charging heavy users for the excess data they use. Whether they actually use that new money to improve their towers is a completely different topic; they certainly haven't been improving capacity well enough for the past three years, when they already generate plenty of revenue. Why will it be different with caps in place?
Edit: I saw the same thing happen with Time Warner Cable in Rochester, NY. Just s/AT&T/TWC/ and s/towers/copper/ and it's the exact same situation.
It isn't a difficult concept. A very small number of people contribute significantly to the network load. Yeah, ideally there's more capacity than anyone can ever use, but back here in reality that would be remarkably expensive to fulfill.
It's the same thing with crime, btw: A very, very small percentage of people are responsible for the overwhelming bulk of crime.
Is there a study that shows this? Intuitively, it makes sense, but I'm curious. Of course, we must be talking about serious crimes, as pretty much everyone breaks some sort of law almost every day.
When other major countries are investing huge amounts in their infrastructures to support higher and higher capacities and bandwidth for lower and lower prices, our ISPs are instead capping bandwidth and increasing prices without investing that higher revenue into better service.
Especially when you pay $25 per GB, and it costs an extra $10 per GB. People will probably stop streaming Pandora over the cell network, and heavily watching movies.
Canada has had data limits the entire time, and Blackberry has been constantly cautioning US providers about offering unlimited data plans in the name of providing better service to their customers.
This kind of limitation for regular ISPs is ridiculous, because the cost of bandwidth is actually cheap, but it's different and much more expensive with cell phone networks.
You think Steve just found out about it now? You think AT&T didn't consult with him?
What this argument is not taking into consideration is that some people don't use their device as much as others, and they do so by choice. Plenty of people will take a $10 discount to cut their phone usage a bit, and be happy that someone offered them the choice. Personally, I'm a data-crazed maniac who uses my iPhone constantly (and uses around 900MB/month) but that doesn't mean everyone is (or wants to be).
I'd also argue that there are only a few applications that consume large amounts of bandwidth, such as streaming/downloading audio and video. You can still take full advantage of your phone (with the exception of those two things) and not use much bandwidth.
As for the $30/mo unlimited, I believe part of the reason why AT&T removed the unlimited option in the first place is because a disproportional amount of bandwidth is spent by people who jailbroke their iPhone and use 100+GB/month using it as a 3G modem.
Also, you don't need to jailbreak to tether. I forget the details, but basically you go to a web address and install a new carrier profile and thats it.
If AT&T want to be the big boys on the block they have to invest in their network, end of story. The reason they got rid of the unlimited option is because they want to make all the money and not do a thing to improve their network.
A lot of startup activity is centered around the internet. Limiting internet usage that will mean that people won't be able to use our web services just because their monthly bandwidth quota is up. This is a barrier to the web-centric view that Google/Facebook/Twitter/etc have been propounding. This is not a step in the right direction.
The truth is, there's simply not enough bandwidth, especially not to stimulate "unlimited" data use and motivating people to become "data hogs." And it's not easy at all to increase the resources. There are real physical and technical limitations for providing more bandwidth which are hard to overcome in many areas.
The unlimited data plan was designed for much less devices in the wild.
The unlimited plan is and always was a marketing ploy to make the plan look like a deal. It's just too bad that AT&T (or at least one of the other major telcos) haven't been brought to task for their deceptive marketing practices.
Well... In one of the initial discussions someone did the calculation that if you leave Pandora playing for 40 hours/week, it amounts to 5+GB of data, and that's on the low quality stream.
Apps don't have meters, and they don't have any mandate to tell you that they're hogs. Therefore, tiered bandwidth billing is unfair: it is simply not possible for a customer to know when they're buying something that will cost them dearly in terms of bandwidth usage, nor is it feasible to isolate which of 100 apps on their phone is responsible for their overage billing in a given month.
The problem is that power use is limited by physics. If your gas stove valve was stuck open and was venting your gas line you'd know, because the house would turn into an oven. Bandwidth use is not limited by any laws except the capacity of the device, so the difference in usage can vary over a much larger range than power use can.
He seems to be advocating that there's something wrong with not consuming 1.5-2GB a month. He's a heavy user - cool, but I see no reason for the majority of the world to be just like him.
> "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."
Honestly, I don't think anyone has been encouraging people to use less bandwidth. For most users a few hundred megs a month is plenty, and there's nothing wrong with that. Unlike us geeks they're not constantly chained to their gizmotrons, and do not live like cybernetic organisms. That's perfect okay, and in fact I'm jealous of that lifestyle sometimes.
Don't get me wrong, I think it's very short-sighted to cap bandwidth - we may very well be killing the next world-changing app in the crib. The world will find use for all of this bandwidth if we let them, but at this point in time I don't think one can look at the bandwidth usage numbers and proclaim that people aren't using their phones enough.
At what point does the phone stop working for us, and instead we for them?
If you're AT&T, when households are looking at their bills for stuff to cut, you don't want them looking at their data plan and saying, "well, I guess I don't use it very much..."
You want the gym membership to get the axe.
My startup was recently bought by Nokia, and unsurprisingly, one of the fringe benefits of working for Nokia is getting a free smartphone (GSM 3G) with an unlimited data plan (T-Mobile, thank God). My wife and I looked into cancelling our Verizon family plan and moving to just one line for her, but the early-termination fee is so high that it’s cheaper for me to just keep the Verizon phone. And since our Verizon plan has free in-network calls, it’s also cheaper for me to carry the Verizon phone, so that she can call me on it.
The flip side of this is that people who abandon their carrier because of network issues will be more like a slow leak than a stampede, so AT&T executives with an eye on quarterly profit results would rather do anything but invest heavily in building out their infrastructure.
Whether one can cut the bill immediately or in X months time, the point is that the last thing AT&T should want is people saying, "why am I paying $X when I hardly use it?"
They should want to have mobile data usage so ingrained in their customers' lives that people wouldn't dream of cutting it when their contracts run up.
AT&T has sold a lot of data plans by making them required for iPhone purchases, and plenty of people wanted the fancy new toy. What happens when smartphones aren't the fancy new toy? How many AT&T iPhone customers, if they had to drop their iPhone and get another phone, would still buy a data plan if it was simply an option rather than a requirement?
It would be like encouraging people to eat more when they go to an all-you-can-eat buffet by giving them doggy bags to take home as much as they want, on the theory that then they're more likely to come back. If you're losing money on those people you don't really want them to come back.
It's obviously an open question as to exactly what their costs per user are for light versus heavy users of data, but I'm going to infer from their recent actions that they've decided that at the moment supporting heavy users of data isn't such a great business to be in.
I don't think they're outright trying to discourage usage, but any cap whatsoever will make people paranoid about using it up, and have the effect of making them use it less. If there's no limit, you never have to worry about it, and will feel free to use it all the time. But if you know that you could hit that cap at some point, you'll think twice before starting up Pandora or YouTube, even if there's no reasonable way you could hit your cap.
Alienate one network "hog" and you'll find 49 others who will pay the same amount of money for a fraction of the usage. And for all the users they lose, they'll recoup millions in overcharging.
I love how customer satisfaction is one of AT&T's most important goals...
These plans may be slightly cheaper than US plans, but that is nothing special. What is nice, that if you DO go over your limit, you can continue using the net downloading/uploading albeit at a ridiculously slow rate 16kb/8kb. If you want to go back to your usual speed you send a SMS and upgrade for $1 per GB or go to the next plan.
What is better in this approach is that the customer is never charged over what they agreed to pay in advance.
Sure beats paying $200 for a local phone bill in early 90s in USA for connecting to local ISP...
However, if AT&T were to force out the unlimited data pricing model and replace it with per GB pricing, they'll be able to fund the scaling their infrastructure up as the usage increases. Similar preferences for per-GB models have been voiced by other telcos as well, claiming "unlimited data is dead" (I don't know where I read this). Frankly, I'd be surprised if there wasn't some collusion amongst the big telcos regarding this.
I'm not saying I'm happy about this, but I think the scenario I describe is much closer to reality.
This is why I have little sympathy for them when they bitch and moan about how people are using 'too much bandwidth.' Also note that they never come right out and say things like, "We oversell our bandwidth," or, "Our infrastructure can't handle what our customers are using." It's always framed in terms of the 'big bad' users that are hurting the poor ISP's stalwart network.
Granted, I'm not sure that AT&T falls into this net. They probably didn't get government money to build out their 3G network.
Of course, there's never any shortage of money in the kitty at AT&T to buy advertising to tell the world how great their network is.
http://www.telco2.net/blog/2008/09/the_inversion_of_the_tele...
Having your users be paranoid that they're going to go over their cap and get absolutely reamed for overage charges is not exactly how you build an advanced, high-bandwidth content delivery system.
Even less are going to be "data pigs" that use a trivial 1.5GB after such a change, high prices guarantee that.
Silly buggers.
I don't think this would be such a bad thing -- just as you pay on a per-unit basis for the water and energy you use, paying per unit of bandwidth consumed seems entirely reasonable. In an unlimited plan, typical users effectively subsidize a small minority of heavy users.
Of course, the real problem is the outrageous charges for when the bandwidth cap is exceeded, as well as the lack of proper notification for when you run over your limit.
Do you have any evidence that lines are getting anywhere close to 100% utilization perpetually?
[1] I'm simplifying of course, but this is the basic idea.
But my point was that bandwidth is (or should be) renewable. If you do a download when everyone else is doing one your traffic should be getting shaped down to the provisioned minimum until there is room for it. This will make the traffic slower during those times, but there are going to be times where nearly no traffic is on the line.
It hardly ever works out in a reasonable manner.
I've lived in 3 countries with traffic caps, and it almost always ended in tears, and made me rather bitter about the whole thing.
I still have a copy of my $900 internet bill somewhere.
And rate-limiting would be great if it was to something reasonable like oh, I don't know, minimum 512/1024Kbps? Surfing at dialup speeds is virtually impossible for a household in this day and age, and that's what the majority of them drop you down to.
Great, "20MBps" internet. That you can use for 5 days, and then its 64Kbps for the rest of the month, sucker.
If the telcos are not price gouging, there shouldn't be a problem with data caps. Stop being a cheapskate!
>Even if it was possible to implement QoS to broadband
It most certainly is possible.
>Why should someone in a busy area be capped when they reach the limit
What limit? I'm arguing that there shouldn't be a limit. You just provide a guaranteed minimum bandwidth. When the line is under-utilized the connected clients can use as much as they can. When utilization goes up traffic is shaped down as far as needed to handle it.
With data caps then people in your less busy areas will find themselves completely offline toward the end of the month while the line sits idle. Why?
I suspect how it will work out if it happens in the US is rather more like how Telecom NZ or Vodafone operate (Telecom used to be mainly owned by SBC/AT&T).
Where either you don't have the option of a data block past a certain upper bound, and get shaped to 64kbits for the rest of the month (Vodafone).
Or you have the option to remain full speed but the overage charge is out-of-this-world insane, something like 2c/MB. That's right, per MB. 10GB over cap is $200 added to your bill. Ouch.
However, your phrasing implies that you think Apple is "stuck" and getting shafted by AT&T. Really, it is quite the opposite. Apple surely looooves the exclusivity deal because they can leverage it over AT&T to collect globs while AT&T eats the cost over the life of the subscription. The exclusivity deal is one of the key reasons that Apple is able to offer such fantastic hardware at their current price point.
However, paying $20 (!) to have access to tethering without extra bandwidth, is complete non-sense. I just can't find a reasonable explanation for this. As well as the price for extra data for DataPlus plan: $15 gives you 200MB, whereas $10 gives you 1GB if you are on the DataPro from the start. I also assume they won't have roll-over data: if you use less, you lose, if you use more, you lose.
Finally, having data caps impedes on the benefit from getting multi-tasking. Besides a faster switch between apps, the point is to have apps stay connected while you're doing something else. (think Pandora) If you start thinking about your data usage, you'll have to think about what's actually running. Exactly what Apple didn't want you to do.
But since they're limiting your bandwidth already, I'm not so sure why it matters if you use it from a laptop or from your phone.
In the end, I know why they're doing it: because they can, and because they want to limit the number of people who do it. It just bothers me because it doesn't make sense technically.
They have a lot of smartphones (http://www.wireless.att.com/cell-phone-service/cell-phones/p...) to average the usage numbers over and push the percentages up. I wonder what the iphone percentages are.
"He said 65 percent of the company’s smartphone customers tend to use less than 200 megabytes a month, and 98 percent averaged less than 2 gigabytes." http://www.nytimes.com/2010/06/03/technology/03phone.html?sc...
I doubt the fact that they'll be getting tons of new customers because people can now save $10 a month. Apple has intentionally scaled back on the number of different models they offer (on all products). Why? Because otherwise there is too much choice.
Most people have no idea how much data they use in a single month, and as mentioned 98% aren't using a massive amount. So, to squeeze a few extra dollars out of the 2%, they just made the decision way more complicated for everyone.
People buy iPhones because they are sexy, easy to use, their friends have them, etc. There is no need to complicate the purchasing decision by forcing people to start guesstimating their data usage.
What happens now when my mom decides to get an iPhone? Before she could buy knowing that "it just works". Now, she's going to call me and start asking questions about which plan she should get, then get confused by the answers (since tech-wise we don't really even speak the same language). All of the sudden, it's starting to seem like a headache.
For each customer they don't sign up because of the complicated pricing (or those they lose because people who don't use that much bandwidth are now afraid that they're going to be constantly being charged for overages), they would have to sign up an extra 6-10 customers who signed up because they can get a plan for $10 a month less than they could have before.
Seems unlikely, no?
Since I cannot tell the future, I have no idea if this will have a chilling effect on data-intensive apps or workflows yet to be developed or envisioned. If AT&T increases the amount of data included in its plans at some point in the near future (which would be reasonable, although possibly less profitable), this would be a moot point.
In other words, AT&T's towers are overwhelmed because AT&T didn't build enough capacity. That's not my fault and I shouldn't be paying for it.
Who exactly is supposed to pay for it, if not the people using it?
This is like charging a flat price for petrol, say $50 a week, and expecting people who only drive occasionally to the shops to pay the same amount in fuel as people who make regular interstate trips.
For the 98% of people, their iPhone service just got cheaper, and for 65%, a reduction by half in their data bill.
Tiered usage charges slow growth. That's great for AT&T, but bad for consumers as it also slows the decrease in the cost of bandwidth. You save a few pennies, and we all suffer from the lack of investment to support growth which in turn drives innovation.
The lack of competition in the US broadband and phone market is the cause for slow growth, not download limits. You can say that Australian broadband is still expensive and slow (in comparison to some countries) but that is at least partially due to the low population density and the massive distances between cities. Australia has 219 ISPs offering ADSL (source:broadbandchoice.com.au), and as a result the value for money offered has increased significantly in past years, and will continue to.
Even if such a fuel tank existed, would it be unreasonable for BP to charge by the litre of fuel removed? I think it'd be the most sensible way to avoid demand overriding supply, rather than charging everyone increasing amounts for access to the fuel source.
But effectively no fuel was removed. Look in the tank, it's full right? What you would charge for is accessing the tank at all because unless it is sitting at 0 constantly (complete continuous usage) there is effectively no difference between someone who took 1 gallon and someone who took 1,000 gallons.
EDIT: Your point "but there is still a limit which the company does not wish to reach" is certainly valid, but properly dealing with this is complex. Simply capping to e.g. 5 gig is just going to leave you with empty lines for the last part of every month. Since your problem is utilization, not capacity this doesn't even address it. You had room for twice as much access but instead you look slow and expensive.
If you had a company large enough to run its own networks how would you deal with growing capacity? By putting some kind of bizarre transfer cap? No, that would just get you fired. Instead, you would shape traffic to even out the utilization and add infra as soon as you passed some utilization threshold.
The problem with shaping traffic is that it means companies simply shape during busy periods, rather than increasing capacity. By offering download limits at set speeds, ISPs guarantee a speed you will receive (limited only by the quality of copper in your phone line).
My point is largely that charging people who use download the most more money (and therefore, on average, are increasing the load at peak usage most often) is the most sensible method of controlling load. If your experience with mobile internet is anything like mine, consumers certainly do not want bandwidth shaping making it any slower.
That said, the Australian solution sounds quite good as far as metering goes.
Doesn’t that just grind cloud-mobile, gaming-mobile, video-mobile, and some-really-cool-but-currently-unknown-mobile development to a halt?
This seems all too true as we know just how fast the mobile industry grows each year. OnLive cloud computed gaming is supposed to be live within two weeks. I can only imagine that within a given period of time they'll be porting it over to iPhones and iPads. AT&T seems to be stifling innovation with these caps.
As the speed at which we access data increases, so do the bandwidth requirements for retrieving more data at a faster rate. We're talking higher video resolutions, higher sound quality, and more content immersion. Rather than paving the way and pioneering a new wave of applications, AT&T has bastardized their network with low data caps that will leave us developers pining for more within the next two years.
The Camera phone will use Data. They are charging for more data. They are set to make a bit of money off this...
And it's a lot easier than spending money on upgrading their infrastructure.
Only the self proclaimed "data hogs" are complaining.
Now, if they would only let me unlock my damn phone as a paying customer of 5+ years....