AT&T Moves Closer To Usage-Based Fees For Data 441
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."
Time Machine (Score:5, Insightful)
Welcome back to 2000. Data-usage fees per MB were common place back then. Now it's all based on the actual bandwidth, 512kbit/s, 1mbit/s and so on, like it really should be. Use how you want to. In Europe that is.
It's funny to think that USA should be the best nation with technology and infrastructure, but still your internet connections suck this much.
Profit (Score:2, Insightful)
Re:Time Machine (Score:3, Insightful)
There are still plenty of providers that charge by the MB. But maybe those are just US providers. For web hosting and dedicated/colocated servers, many plans will say 1500GB per month allowance and then something ridiculous like $3/GB overage fees.
95th percentile billing is generally standard for good colocation. And probably should be the standard for all bandwidth billing (if it's not unmetered/unlimited)
Re:Time Machine (Score:5, Insightful)
I suppose that would be possible if every part of the network could carry the maximum traffic of all the lines it feeds. But in practice that is not the case. For service delivery (lets say power) we pay a mixture of fixed costs for infrastructure and volume charges for the resource we use. I think that is the best way to go economically and it is fairer on all users as well.
Usage distributions are often expontential (Score:2, Insightful)
Usage distributions are often expontential or look near to an exponential distribution (other distributions would be power-law distribution or pareto distributions).
This means that a small proportion (20%) uses more resources than say a majority (80%). So it fits this case quite well.
So most people use 60% of the ``bandwidth'' or less and 3% use 40% of the bandwidth.
The problem here is that these distributions are scale free. This means there will always be a heavy usage proportion which uses way more than other users. But that's actually quite natural. It is too be expected. So when Rogers and AT&T and Bell make up these stats, they are most likely true, but they are being dishonest. They don't expect users to understand statistics enough to accept that this will almost always happen. This is expected, and for AT&T they know it is expected. You can't tell me that everyone working for AT&T lacks the stats knowledge to know this. So they are basically arguing dishonestly that power users ruin it for everyone. Well get rid of the power users.. Now there's a different distribution, are you going to rid yourself of the power users again? How long before you have no users?
This is an expected usage distribution, it is nothing to be concerned about but it is always going to be used as a club against people who actually make use of a service.
Corporations are people too (Score:5, Insightful)
Corporate America: our mistakes are our customers' fault and they need to pay through the nose or else they'll never learn.
Maybe with all the extra money they'll be getting with this, they'll upgrade their network so they can actually give people what they said they would give them at the price they said they would!
Re:Time Machine (Score:5, Insightful)
As a technical reason, I'm not sure why charging based on the bandwidth is superior, if you know that the vast majority of customers don't max out the connection most of the time. Charging by usage seems a little closer to capturing the proportion of resources a customer uses in that case.
There are other downsides to it, but they seem mostly like social ones, not technical ones. For example, people don't like feeling like they're being metered, and it has a chilling effect on a lot of online services if people have to worry about their bandwidth usage.
Wrong story label (Score:5, Insightful)
This story should have been declared "AT&T Declares war on customers". For reasons unknown, AT&T just doesn't grasp the idea of upgrading their network. So they provide shoddy service and blame their users instead. They do everything except take care of their network and their customers. Why do they insist on infrastructure upgrades as a last result? How can they grow when they can't handle what they have now?
They recently ranked dead last on a major US survey of cell phone providers for every single category. In all seriousness, what are they going to do when they are no longer the exclusive Jesus phone provider? People put up with for lack of an alternative network for their Jesus phone, without that exclusive they would start hemorrhaging customers.
Re:Time Machine (Score:3, Insightful)
It's funny to think that USA should be the best nation with technology and infrastructure, but still your internet connections suck this much.
By any rational standard the USA is far from the best nation in terms of communications infrastructure. I'm not sure who is, but Japan comes to mind. The USA is probably in the top 10% somewhere.
What about lower fees for low bandwidth users? (Score:2, Insightful)
What I would like (no chance) is if they charged /less/ if you were a low bandwidth user. Instead, it's one price no matter how little data you use. Then they complain if you use too much data.
AT&T Then and Now (Score:5, Insightful)
Then : Use AT&T and download video and songs faster!
Now: Too many people are downloading video and songs!
Re:Time Machine (Score:2, Insightful)
USA should be the best nation
It's politically incorrect for the USA to be the best nation in anything nowadays.
I can see the conversation now (Score:2, Insightful)
2. Tie in I-tunes, drm, and a lot of other nasty crap so that once the user starts using it, he loses everything he's purchased (music, apps, etc) if he stops.
3. Increase the price on those users because they doing something "wrong" by using it too much.
4. ?????
5. Profit
Screw that bullshit. I think I'll keep using my phone as just a phone, until these guys get their heads out of their asses. Do folks really have that much disposable income that they can drop hundreds a month on silliness like this? It's a rethorical question.
Re:well (Score:1, Insightful)
Re:Time Machine (Score:5, Insightful)
Another sense of Deja vu: years ago AOL started offering unlimited connection, appearntly expecting people to not actually start using much more time.
The results of ATT's experiment duplicate the results AOL got about 10 years ago. So obviously this is taking ATT by suprise. Different company. Different product: this is phones, not dialup! And of course they can't be expected to think about wheter or not they could meet demand before offering it.
What's this line on my iPhone bill? (Score:5, Insightful)
Dear AT&T,
I could've sworn I remembered seeing something on my monthly iPhone bill... Ah, there it is.
" DATA PLAN IPHONE 12/02-01/01 30.00 30.00
Data Unlimited 12/02-01/01 0.00 0.00
Includes:
DATA ACCESS "
See, AT&T? It's right where you printed it. Unlimited data for a predetermined cost.
Now, AT&T, if you would please GTFO of here with this talk about billing me based on usage or prepare for me to take advantage of change in ToS so I can get out of my contract without penalty.
Best regards,
A guy who's looking forward to his contract ending so he can get an Android on a network that hopefully sucks less.
Re:Time Machine (Score:5, Insightful)
More like welcome to the telecom industry of the last century; an industry whose main product was a huge accounting system that also happened to include phone functionality.
To discern the real intentions one does not need to look further than phone calls and SMS. They're metered. They deal with 'heavy users'. Are they cheaper per amount of data you transfer?
Personally I'd rather sponsor some heavy users with a few percent of my bill than pay the thousands of times the actual cost that we somehow seem to end up with when having metered access.
Re:Time Machine (Score:3, Insightful)
The fact that USA is a really big country doesn't really matter. Like USA, not all of Europe is heavy-density populated. Scandinavia for example has much smaller population density than USA, but in cities people get 100mbit/s to home, even 1gbit/s. If you're living off a city, 24mbit/s is common place. And no such bullshit than usage fees.
Re:Profit (Score:5, Insightful)
I'd say greedy is luring in customers by advertising unlimited access, requiring them to pay $30 every month for two years for that access whether they need unlimited or not, and then deciding that they're using too much of their "unlimited" connection. I still don't understand how it's not illegal to advertise something as unlimited, and then limit it.
Re:The classic double speak (Score:3, Insightful)
Sure we can. If they foist extra fees that are not included in the contract I signed, then the contract is void and I can leave immediately.
Re:Profit (Score:3, Insightful)
Sigh (Score:5, Insightful)
Please buy our stuff! (Score:3, Insightful)
Our new device is really cool! You can watch video, listen to mp3s, and surf the web. But please don't do any of those things. Our network isn't designed for it. If our device changes your life like we advertise we'll need to charge you a lot of money to keep using our network. Because people who use our network as advertised our bandwidth hogs. Ok? Sound good? Great!
Re:Time Machine (Score:4, Insightful)
Say I build a house and rent it out. Once the house is built it doesn't really cost me anything from month to month So the rent must be almost zero right?. Of course I had to borrow to pay for the house (the infrastructure) and I need to make monthly payments on top of the small costs involved with repairs, council fees, etc.
Re:Support Publicly Owned Providers! (Score:2, Insightful)
That's socialist. We aren't socialists in America. It is AT&T's God given right to make what they can make.
Re:Wrong story label (Score:4, Insightful)
Jesus phone? God only thinks he's Steve Jobs.
Seriously, this is not the sort of thing Apple can ignore. Metering by the megabyte makes the iPhone less fun. It cuts into the experience. This is a serious threat to the iPhone and Apple's profit margin, and I really don't think Steve is going to take this lying down. No matter how many livers he has to go through.
Re:The classic double speak (Score:3, Insightful)
Yeah. Metering just causes too many social problems. Many people just write off entire services if they have to keep track of how much they use.
I've always been in favor of you get X MB uncapped per month. Once you cross X MB, then you get throttled (yes... evil throttling...) . I think lets the user get away without worrying about anything. It also allows ISPs to target that 3% of users who are streaming videos all the time.
Re:Time Machine (Score:5, Insightful)
Re:The classic double speak (Score:3, Insightful)
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.
Well ultimately their intent is not just to make the 3% pay more for the extra usage, but to make *everyone* pay more. It's just that they need an excuse to do it, and blaming other users for over-using the service gives them that excuse. These cell carriers want to advertise data services, they want to charge for data services, but they don't want to actually provide those services unless you pay extra.
Re:Time Machine (Score:5, Insightful)
Shock avoidance pricing.
Most people, even though they don't use data much, would much prefer to pay a fixed $30/mo and have no surprises than to pay as they go and end up with $150 in data usage some month.
By providing piecemeal pricing that's so high, almost everybody is herded into the fixed rate pricing to avoid surprises, even though if they did the math over a two year period they'd be better off with a couple of $150 "surprise" months and a few piecemeal months (say, $450) than had they paid the higher "unlimited" monthly plan ($720 for 2 years).
Prediction (Score:3, Insightful)
Whether it is AT&T (my carrier) or not, the first wireless company to do this with will drive away smartphone users by the millions. Once that first usage-based bill hits, the cancellations will come rolling in.
I am willing to pay $30/month for mobile Internet. I am NOT willing to pay $100/month in the future for the same usage. I'll either switch phone companies, or failing that, I'll just switch back to a phone without the data plan and do without mobile internet access.
Necron69
Re:Time Machine (Score:5, Insightful)
This doesn't really work though. The infrastructure was built using government funds. It has already been paid for. Any usage fees are upkeep and profit. Guess which one is the reason the fees keep going up?
usage based fees... (Score:1, Insightful)
Hey AT&T and Comcast.... Can you also make my cell phone plan, my land line plan, and cable plan all charged on what is used?
For instance... if i only use 150 minutes in a month on my cell phone, can you charge me just for that?
If I only watch 5 cable channels, can you charge me 5/1000 (or however many channels provided) of my normal cost? What about if i only watch for an hour a day instead of 24?
If i have a land line, can you cut my cost to $0 if it's only for emergency purposes and really never use it?
Or would that cut too much into your profit margin?
Re:Time Machine (Score:5, Insightful)
I use some 300-500mb a month of 3G data on my iphone.
The big question I have to ask if they charge per meg. can they block advertisers So I don't have to pay for things I don't want? Usage based billing will kill the web advertising business. As 30-40% of a web sites download size is images and flash related to advertising if I am paying per meg i am not dbouleing my bill just for crap I am not interested in.
Re:Time Machine (Score:5, Insightful)
Dammit! Would you mind not actually using your phone the way we show you how to use it in our commercials!
Re:Time Machine (Score:1, Insightful)
So should I be charge based upon incoming packets? Or outgoing packets?
Should I be charged per incoming ssh brute force attempt or per outgoing connection to a botnet's C&C server?
The reason that charging per packet is a dumb idea is that the _average_ user has no control over them. Heck, the expert user has no control over incoming packets on the ISP's wires. Sure I can block packets at my firewall, but I've already been charged by that point.
Paying for bandwidth is far superior - if my paid-for bandwidth is maxed out then I end up with a technical problem, not a financial one.
Funny, I read this... (Score:4, Insightful)
...and all I see are the same types of statistics that are strolled out by the ISPs when network usage and congestion become a problem. "Blame the top 3%!" "Bandwidth hogs!" "Piracy accounts for 75% of lost revenue!" Whoops, that last one slipped in but I think you get the point.
There are always going to be maximum and minimum users - the whole idea is that, on average, you can handle the load. If you can't handle the load the problem is not the end user - it's you.
AT&T has received plenty of money with which it could expand it's infrastructure. It could relieve the bandwidth bottleneck by releasing the iPhone exclusivity. It could have realized that unlimited users are going to consume as much as they can. Now they're on the hook and they want to blame the user? No, that doesn't float.
(And if I see one more "unlimited*" notation I'm going to scream. When did unlimited get redefined as "limited to ..."? Why is that not false advertising?)
3% use 40% ? (Score:5, Insightful)
Or, put another way: AT&T has found that 97% of its smartphone users are not using anywhere close to the amount of bandwidth they are paying for.
As a result, they should have plenty of extra capacity and plenty of extra cash for network upgrades, right?
Pot calling the kettle black, non? (Score:5, Insightful)
'The first thing we need to do is educate customers about what represents a megabyte of data...
Excuse me, but aren't you the people who charge me for 1MB if I download 1byte?
Re:Time Machine (Score:3, Insightful)
Good point. If they're going to charge per megabyte, then it actually makes sense to go back to having mobile versions of websites without anything more than absolutely necessary to display the content. That's part of the reason it was like that in the first place-- it wasn't *just* that the browsers were awful.
Re:The classic double speak (Score:3, Insightful)
I understand AT&T's position. They simply cannot grow their network fast enough to keep up, and the lack of bandwidth is a pain shared with all customers. The problem AT&T is having is that the iPhone isn't unique anymore. There is Droid and Palm and they'll still have unlimited data plans. Plus, if the iPhone U.S. exclusivity ends, the other carriers will quickly start offering the iPhone too.
AT&T can't charge for data plans if no one else does.
You believe AT&T? Based upon what data? Their FCC reg filings show them in compliance with their cell network...
Of course, they did screw all of us over the E-911 and have to pay a $2meg fine. See, http://www.fcc.gov/eb/News_Releases/DOC-227226A1.html [fcc.gov]
So, in sum - AT&T reports to the FCC that their network is within regulatory standards and AT&T has a corporate history of lying and ripping off its customers.
You elect to believe AT&T, eh? I have a bridge on the south-east side of Manhattan I'd like to sell you and, yes - I do take Paypal....
Re:Time Machine (Score:5, Insightful)
Comcast was yelled at for throttling access to "heavy users," but slashdot linked an article where it proved that heavy users do not actually impact performance on the network for everyone else. (Hence, the throttling was a bogus move.) My question is does this extend to cell networks?
It doesn't. Cell networks are an entirely different animal. Comcast can add more bandwidth by allocating more channels on the cable plant to DOCSIS service and/or splitting your neighborhood into different coax nodes so fewer homes/businesses share the same bandwidth pool.
Wireless companies have a much harder time adding more channels. Spectrum licenses cost billions of dollars and oftentimes will come in an entirely different frequency plan that isn't compatible with existing devices (see T-Mobile's AWS purchase for a good example). Up to a certain point they can add more towers to make the footprint served by each tower smaller (analogous to Comcast splitting the node in your neighborhood) but this isn't always feasible. Community opposition and zoning requirements are often major stumbling blocks to building more cell sites. Interference from other cell sites is also a factor.
The wireless data network was never intended to be used for large sustained transfers. It was intended to be used for remote productivity, light web browsing and other intermittent uses. Some of the engineers I've talked to at Verizon are even honest enough to admit this. This whole problem could have been avoided if the carriers had been honest in their marketing when they were rolling out data services.
Yeah it figures... (Score:3, Insightful)
Yes, that's the way to do it. Before the industry even comes close to reasonable wireless throughput, they're going to take careful aim and shoot themselves right in the foot. With wifi becoming more and more ubiquitous, and providing a user experience an order of magnitude better than 3G, and more and more devices coming out with wifi standard, what the hell do we even need data service for? It's expensive (a wireless data plan costs as much or more as a DSL line) butt slow, quirky, has huge latency, and now, it's going to be even more expensive. Way to kill an industry.
Re:Time Machine (Score:1, Insightful)
OK... how about these transportation-related analogies:
(1) We pay vehicle registration taxes every year that ostensibly goes to build roads. Everyone gets to drive on those roads. Even roamers. However, the assumption is that only a subset of "all vehicles" will ever be on any given road at a time; otherwise we would need to build ten-bazillion lane superhighways everywhere.
(2) There are a limited number of taxi's available in a given area, controlled by registration permits. If everyone in the area wanted to use a taxi at the same time there wouldn't be enough... but because usage is staggered we have enough taxi's. Sometimes things get crowded and you have to wait for a few minutes. Does that mean we need more taxi's? Would increasing the permit costs improve availability? How about increasing the mileage rate?
How are these different from usage-based internet access? In my opinion they are not.
Cheers!
AT&T needs to learn how society needs them (Score:4, Insightful)
Increasing fees per MB now will provide a short-term increase in revenue - but it'll also open a window of opportunity for their competitors. Does AT&T want to be part of the future or would they prefer to be a "has been" on the sidelines as progress marches on?
Re:Time Machine (Score:2, Insightful)
Are you prepared to pay for it?
No I'm not willing (if I owned the company, yeah probably). why? you might ask. the answer is simple, I'm not the one advertising/selling a service that I can't provide. for your info BELL Canada by the time they started throttling user's traffic they increased their end user's lines (from 5 to7 MBPS). if the network is under such heavy charges so that they "managing traffic" why did they increase speed and put the network under more stress ??? Especially in DSL, since it's not a shared pipe (every customer has his own pipe down to the ISP). The 5Mbps cap on the line should be more than enough to not bother the neighbors.
I see no reason you heavy users shouldn't pay more than I do.
I don;t really like the "you" above. you're implying something which you don;t really know! but let me give you one reason. it's "your choice". if you pay high speed Internet to check your emails your problem, not mine!
Seriously, the more you look at it the more it's like a ponzy scheme.
The beauty of percentages (Score:4, Insightful)
I've said this before in other forums. The beauty of this idea is that there will ALWAYS be a top 3% list of of abusers. This is just a scam by AT&T to get more money. If/When Verizon get's the iPhone, people will bail on AT&T in droves. This will have the effect of reducing AT&T's overloaded network, but it will still leave the users with the bill...
Re:Time Machine (Score:3, Insightful)
don't know about cellular network, but in MD taxes paid for Verizon's eastern shore fiber infrastructure. Last I checked my internet costs didn't go down because my taxes were paying for the infrastructure that would be generating profit for Verizon over the next 20 years.
IMHO taxes should never be used to buy infrastructure for private companies, ever. If they won't service a particular area, don't bribe them, tell them to serve the state or don't serve the state. If they won't, revoke their license to do business, kick them out and open the market up for someone that will.
That kind of crap pisses me off...