[telecom] AT&T Chief Regrets Offering Unlimited Data for iPhone

formatting link

AT&T Chief Regrets Offering Unlimited Data for iPhone

By BRIAN X. CHEN MAY 4, 2012

When Randall Stephenson, AT&T's chief executive, spoke about the state of the wireless industry at a conference this week, he shared some surprisingly frank comments about the iPhone. In particular, he said that he wished the company had never offered an unlimited data plan for the device and that he loses sleep over free texting services like Apple's iMessage.

If AT&T hadn't offered unlimited data, it would have been able to get people who used more data to pay up for it, as opposed to having the light data users subsidize the heavy ones, he said.

"My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat," he said in the on-stage interview at the Milken Institute's Global Conference on Wednesday. "And it's a variable cost model. Every additional megabyte you use in this network, I have to invest capital."

AT&T discontinued unlimited data in 2010, and it has since moved to limited, tiered data plans. The switch is working out well for AT&T. In the last quarter, the company reported $6.1 billion in revenue from mobile data alone. Ralph de la Vega, chief executive of AT&T Mobility, said 70 percent of the people on tiered data plans were paying for the more expensive options.

...

formatting link

Monty Solomon wrote: :

formatting link

:AT&T Chief Regrets Offering Unlimited Data for iPhone

:By BRIAN X. CHEN :MAY 4, 2012

:When Randall Stephenson, AT&T's chief executive, spoke about the :state of the wireless industry at a conference this week, he shared :some surprisingly frank comments about the iPhone. In particular, he :said that he wished the company had never offered an unlimited data :plan for the device and that he loses sleep over free texting :services like Apple's iMessage.

My heart bleeds! They can't bill 1000 times the cost of providing a service! How horrible for them, to have to compete in a relatively free market.

:If AT&T hadn't offered unlimited data, it would have been able to get :people who used more data to pay up for it, as opposed to having the :light data users subsidize the heavy ones, he said.

:"My only regret was how we introduced pricing in the beginning, :because how did we introduce pricing? Thirty dollars and you get all :you can eat," he said in the on-stage interview at the Milken :Institute's Global Conference on Wednesday. "And it's a variable cost :model. Every additional megabyte you use in this network, I have to :invest capital."

Nonsense, at best. Flat out deliberate falsehood at worst. The marginal cost of data is only the infrastructure it requires. At peok periods, there might be capital costs, where the network is overloaded, and requires building new cell sites or expanding existing ones. Off peak, it's remarkably close to zero. Cellular companies know this, and they've known it forever. Voice traffic is exactly the same; and that's why, in the early days of (US at least, I'm not familiar with the rest of the world's history) cellular peak usage minutes cost several times what off peak did. Busy hour traffic drives the fixed costs of the network (how many towers they need, and where they need them, and so on); the rest of the time, it's in their interest to get people to use the infrastructure at essentially any price.

There are, of course, real costs of unlimited data. People with unlimited data use more, and they're probably more likely to use it at peak periods. And it really is easier to use huge amount of data than it is unlimited voice. The failure of anyone in the industry to adopt some sort of tiered pricing, where high usage periods cost more than lower usage periods, suggests that it's not really as big as a problem as they'd like us to think.