AT&T sounds deathknell for unlimited mobile data

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AT&T sounds deathknell for unlimited mobile data

By CAROLINE GABRIEL

Published: 10 December, 2009

The end had to come - it's been increasingly obvious that flat rate, unlimited mobile data plans, often at cutthroat rates, were becoming unsustainable, for the carrier's creaking networks and for their profitability. The trend will start to reverse in 2010, forcing customers to pay premiums for high usage or optimal quality of service. Already, cellcos like 3 and Vodafone are using tactics such as deep packet inspection to curb excessive usage or certain types of traffic, or to deliver tiered levels of QoS, for differentiated tariffs. Now AT&T, whose problems with supporting the smartphone data flood on its 3G networks have been most highly publicized, has tolled the death knell for all-you-can-eat.

The cellco has not yet gone as far as a return to usage-based pricing, or a tiered tariff plan, though many observers think it - and its rivals - will have to do this in future. For now, it is mainly focusing on incentives to customers to rein in excessive data use. This highlights the carriers' dilemmas. They have set expectations of cheap, unlimited data, which will now be hard to change without user dissatisfaction and churn (especially if a rival with a better network, perhaps like Sprint/Clearwire, can stick to more attractive deals). And they know their hold on their subscribers is too tenuous to engage in unsubtle sticks like data caps or cut-offs, so they need to present their traffic curbing measures as benefits to the consumer - an increased quality of service for a small premium, or a carrot to reduce usage.

At an investor conference in New York yesterday, Ralph de la Vega, AT&T's head of wireless, said the operator was considering such incentives to get consumers to reduce their data usage, with 3% of smartphone users now consuming 40% of network capacity.

"We're going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage so they don't crowd out the other customers in those same cell sites," he said, though he was short on actual details of how this would be achieved.

Some of it will be down to increased awareness and education, since many consumers are unaware of which apps are bandwidth hogs. "What's driving usage on the network and driving these high usage situations are things like video, or audio that keeps playing around the clock," he said, according to the AT&T transcript. "And so we've got to get to those customers and have them recognize that they need to change their pattern, or there will be other things that they are going to have to do to reduce their usage."

He also hinted at usage-based pricing in the future. "I think longer term, there's got to be some sort of a pricing scheme that addresses the usage," he said. "But that's going to be determined by industry competitive factors, regulatory factors and customer successes."

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