AT&T finally did what was right and came clean about its throttling of unlimited plans. It's about time and I hope they follow up with a more aggressive push to help consumers understand data and why carriers are being forced to manage it.
We're talking, of course, about the carriers' revenue problem. We've all heard the story. Voice and messaging revenues are falling off a cliff due to the popularity of free, over-the-top (OTT) services. Data usage is through the roof and prices per bit are either flat or dropping as well. Meanwhile, operators are being forced to plug billions into network upgrades to remain competitive.
To make matters worse, consumers don't give two hoots what kind of challenges face their monolithic provider. They've been paying through the nose for years now, and let's be honest, operators have done a dismal job of communicating to their customers what the heck is going on with data pricing, voice minutes and next generation networks. It's deplorable that people are still asking what 4G means and can their circa 2010 Android phone do that (whatever that is, their expression seem to ask).
It's this disconnect with customers, along with the operators' unwillingness to admit that they're being squeezed from every side, that made AT&T look like a thief in the night, as it slowly started "unofficially" clamping down on those faithful customers still holding unlimited plans.
When Ralph De la Vega throws up an infographic at CTIA and says it's less than one percent of users who are abusing their unlimited plans, most in the audience picture a guy streaming 24/7 Netflix to his phone. I'm thinking 10 to 30 GB of usage, right?
Wrong. AT&T is now throttling any 3G unlimited user that exceeds 3GB, and any 4G LTE unlimited user that exceeds 5 GB.
I went back and looked at my data usage after hearing about the throttling. Take a look at what happened from September to October in the embedded image. Yep, that's right, I upgraded to an iPhone 4S.
Am I actually using my iPhone more since I upgraded, to indulge in some irresponsible, unfair, data-hogging feast? No. I generally email and text and upload pics and the occasional video to Facebook or Path. I rarely make phone calls, and rarely stream video to my phone. Occasionally, I might stream some audio on my 15-minute commute to work. I'm also on Wi-Fi most of the time.
This is the reality of faster networks, larger cameras, and bigger files. It's also the reason I held onto my unlimited data plan as long as I did. I just gave it up after reading AT&T's announcement. I'd rather pay overage fees than have my iPhone 4S throttled into a brick, which is what most of the reports I've been reading have suggested.
The problem with how this all went down is that AT&T tried initially to pull the wool over customers who really weren't/aren't doing anything wrong. As a customer myself, I'd rather be told straight up that unlimited plans are over, and that I'll have to switch to another data plan than deal with this ambiguous throttled solution. The only thing this accomplishes is to allow AT&T to claim it still offers "unlimited."
"You can still download as much data as you like," a spokeswoman told me. Yeah, I thought, I might be able to load one Web page every hour. Thanks a lot. And for the record, I'm still not convinced that those who exceed 3 GB are only the top 5 percent of data users on AT&T's network.
If the operators are to survive the tough road ahead, they're going to have to do one of two things: create new revenue streams, or tell an honest and compelling story that justifies the data strategies of the future. From what I've been reading lately, many believe the latter is the only viable option.
Consumers don't want to be sold messaging plans that they're not using because most of their friends own iPhones and use iMessage (or Android and some other OTT messaging service). They're also beginning to ask why in the heck they're paying for the antiquated voice minute. It's absolutely ridiculous. Voice minutes should be gratis at this point—especially in light of LTE—but carriers are moving at a snail's pace to reinvent these truly outdated products.
I'll concede that none of this is easy. But that elephant has been sitting in the corner for a long, long time. Because I do understand at least some of what's happening with data right now, I can actually sympathize with where the operators are coming from. But blaming and penalizing the customer for using their devices on networks that they've been paying to use for years is not the right way to solve these problems.
In short, AT&T can now add deficient public relations to their list of obstacles to overcome going forward, and I'm not the only sees it this way.
Industry analyst, Jeff Kagan, says that AT&T's strategy may very well backfire and hurt the company badly.
"The problem is with one hand they are advertising and marketing and offering new smartphones with unlimited features," Kagan said in an email comment, "but with the other hand they are slapping their customers hands when they try and use these services that they bought and paid for."
Kagan, too, cites the disconnect between AT&T and its customers. "I understand AT&T's problem. They have a wireless data shortage. But that's not excuse to treat your valued customers like criminals," he said.
I also talked to Guy Rosen, CEO of Onavo, a company that makes cloud-based data compression apps for iOS and Android. Rosen says his company's apps not only reduce a user's data usage, they also report to users what apps on their phones are using the most data. This kind of education, he says, is key to bridging the gap between carriers and customers.
On the matter of AT&T, Rosen says the company has misplayed its hand and in the process sullied the user experience. "Throttling is still throttling," Rosen said. "Customers were sold unlimited and throttling at 3 gigabytes means they are not getting what they signed up for. 2G speed mobile Internet is the same as no mobile Internet: no video, no streaming, no maps, web browsing at a snail's pace.
Rosen notes that AT&T's policy says that the first time a user exceeds 3 gigabytes the carrier will send a text message, telling the user that they will be throttled thru the end of that billing cycle.
"If you hit the cap again next time, you will NOT get a text message any more, you will just be slowed," Rosen said. "This is completely unreasonable, and consumers who accidentally hit the cap from time to time will find themselves in the dark.
But still he stresses that much of the present discord could be eased by education. "In general, any data management policy based on caps is incomplete when consumers don't have tools to understand which activities are actually sucking up those megabytes and to do something about it," he said.
As a person who does understand what my phone is doing, as well as AT&T's current "data management problems," I'm still confused by the way the company has handled this situation. And that is perhaps the biggest problem of all.