Color me surprised. AT&T’s news that data rates will change was completely unexpected, as far as I am concerned. I’ve been ruminating over this all day and thinking about if this is a good thing or not. I’ve got some interesting ideas. To me, it breaks down to value, precedence, and AT&T’s intention. Get your reading glasses, this is a long one.

Value

One of AT&T’s key points here is that most customers will be saving money by getting a package that fits their usage patterns. I question this assumption a little bit. Below is a rough calculation of AT&T’s new plans vs the previous unlimited one. The assumption is that the unlimited was theoretically capped at 5 GB, despite it technically having no limit (just for the sake of argument).

DataPlus Plan    200  MB = $15 = 13  MB / $1
DataPro Plan     2000 MB = $25 = 80  MB / $1
"Unlimited" Plan 5000 MB = $30 = 167 MB / $1

So right up front, it is easy to see that “buying in bulk,” so to speak, represents a fairly good value. Again, technically the Unlimited Plan is more and more of a value the more it’s utilized effectively. However, before people start rioting outside of AT&T’s headquarters, consider AT&T’s explosive secret weapon. 65% of users are covered by the DataPlus Plan, 27% are covered under the DataPro Plan and the remaining 2% actually use more than 2GBs. This means, for all intents and purposes, that these new plans are a tremendous value to 98% of AT&T’s customer base. I’m sure the massive majority of customers will gladly pay $15 less for a plan that fits their usage patterns.

This is actually, extremely exciting for me. One of my biggest gripes with average people using smartphones is how much money they waste on a data plan they aren’t using effectively. AT&T’s new data plans now make it possible for a normal person to have, and use, a smartphone without getting gouged (assuming that customers are aware of these plans and actually switch).

But then there’s that matter of the 2%. Power users? Jailbreakers? Probably both. How are these people affected? In short — they aren’t. Everyone who currently has an unlimited plan is not forced to switch. Upgrading to a new phone will not automatically change it either. The hubbub is over potential - exclusively new customers. This makes me wonder: if someone really needed unlimited data, then it’d be fair to assume that they are enough of a power user to already have a device, right? Even if not, these new customers will have new expectations and usage patterns that will match the new plans. AT&T’s Facebook Fan page has an official comment that sums things up pretty well.

It seems odd that so many current customers are complaining about these new plans. Those customers who have asked us for cheaper data plans are getting their wish, and those who have unlimited plans and want to keep them are being allowed to do so. Our goal is to make mobile Internet available to more people, and I have a good feeling that we’re on the right path.

Then again, this is AT&T beating around the bush, and treating us like children, but more on that in a second. I mean, ultimately, they are doing the right thing by allowing grandfathering for old users with unlimited plans.

A final note is the sheer stupidity of paying an extra $20 a month for tethering on the iPhone when users are limited to 2 GB. It’s $45 for 2 GB to be shared between a computer and the iPhone… absolutely crazy. I guess, right now, my questions are:

  1. If only 2% were using more than 2 GB, then why bother doing this at all. Wouldn’t you make an exceptional profit on customers that are using less than 200 MB but paying full price?
  2. If the 2% is really having that much of an effect, why not actually enforce the 5 GB accepted limit to curtail the supposed “damage” they do.
  3. Why not adjust some of the tiers to still have an unlimited plan. Even if it was $5 extra, thus making it $15/$25/$35 for DataPlus, DataPro and Unlimited respectively. This accommodates everyone.
  4. If you’re going to give us these limits, why not implement a rollover feature as AT&T does with minutes? I have a feeling this would be looked on very favorably.
  5. I’d be way more pleased with the DataPlus plan being 350 MB and DataPro being more like 3 GB. Something about that extra cushion makes me feel a bit safer with the decisions. The current scheme seems way too crunched.
  6. If this is, again, a “2% is killing the network for everyone” issue, then why not freaking IMPROVE YOUR NETWORK!

To wrap up: value. It seems that nearly everyone will save a little bit of money. The 65% lot will save a ton. I still don’t completely understand why AT&T is doing this bait and switch though. What cost will this have for everyone else?

Precedence

My next urgent concern is the precedence this sets for other American carriers and the effect it will have on the future of the mobile space. Now that one carrier has committed the crime, others will definitely follow suit, citing AT&T’s jump as “a new market direction” (or similar bull). This could spell disaster for all consumers on every carrier. Granted, since AT&T took the plunge first, I foresee other carriers having more competitive options: better prices and bigger packages. T-Mobile and Sprint kinda feel like holdouts to me, safe havens for geeks. We’ll see.

To what end though? If Verizon caps internet and has better options, then (for the sake of argument) Sprint comes along and has bigger (or no) caps and even better prices, then won’t the market gravitate towards Sprint? Then decidedly towards an uncapped, unlimited plan? We’ll be back where we started and all of this hassle would have been for nothing. Let’s assume this doesn’t happen though.

From AT&T’s data plan page:

Mobilizing everything – websites, TV shows, music, games, social networks, etc – is the future of the Internet, and it’s made possible by the combination of faster wireless networks, smartphones with computer-like capabilities, and the tens of thousands of innovative mobile apps. Virtually everything previously done while sitting at a computer can now be done while walking down the street, standing in a grocery line, or anywhere else.

They are essentially trying to say “do everything on your phone, but less.” What kind of expectation is that? I mean, it seems like they want to support innovation on their networks, but they are actively preventing it. The effect on the mobile market seems devastating. As the mobile space expands at an alarming rate, we need a big space for innovation to grow. Especially now, when these new devices are increasingly becoming exceptional content consumption devices. AT&T’s caps (and the assumption of other carriers following suit) will stifle the space and render it weak. I’d be terrified if I was a company that delivers mobile content. While just yesterday, your company seemed to be in the right space, and now it’s in jeopardy. Perhaps the thinking is, as mobile expands, maybe AT&T will back down. My thinking is that this will keep the mobile space from expanding in the first place. Hopefully I’ll have egg on my face and eat my words in a few years. I’d like some feedback from content creators on the subject. My hope is some will speak out over the next couple of days.

AT&T’s Intention

AT&T’s intention was not to hurt anyone. I honestly think they have their customers in mind. My problem comes with how they are handling this. Check out what AT&T has on their new data plan info page.

As the U.S. smartphone leader, AT&T has introduced new more affordable data plans so that more people can experience the benefits of the mobile Internet. We’re making it possible to break free from the traditional “one-size-fits-all” pricing model and letting customers choose the data plan that best meets their needs and budget.

It’s carefully crafted to be as fun and unprovoking as possible. It’s almost like AT&T is doing you a favor! Sounds like that friend everyone has. “Yeah, it’d be super cool if you hung out my place! Oh while you’re here, can you try to fix my oven?” At first, it seems like he’s doing your a favor by letting you hang out, but the motive becomes clear quickly. AT&T is also quick to say that “current users are unaffected, stop complaining.” That attitude comes off as horribly snobby. Finally, on AT&T’s Facebook Fan page, they continually mention that “you’ll be able to use AT&T WiFi for free!” as if that’s actually a viable and acceptable solution. AT&T has been harking that crap for years, and it barely makes us blink.

Wrap-Up

The conclusion I fundamentally draw is that this will most likely be beneficial to penny pinching smartphone users, but really really really bad for the market, the future and innovators/mobile developers/content creators. I’m not happy, you probably shouldn’t be either. I have never questioned my iPhone, but today, I actually considered leaving the hundreds of dollars I’ve spent on my iPhone (apps, accessories, etc) and moving elsewhere, even though I’m essentially unaffected (yet). To anyone that knows me, this is simply astounding and unprecedented. If money was no object, I may have done it already out of a knee-jerk reaction.

Who knows, maybe TheCellularGuru will get a new webOS Guru in the future.

Tweet