Why AT&T May Be Doing the Right Thing

Recently, AT&T announced that it was doing away with unlimited data plans for smartphones. While power users and geeks everywhere have decried the change, I’m wondering whether it’s actually the right move.


A while back, I had a conversation with a friend (my old college roommate, as it so happens) about Net Neutrality. I defended the idea that no one should have control over what people choose to do with their bandwidth (so the idea that telecoms could throttle VoIP services from competitors in order to bolster their own offerings, like what Comcast had done for a while, was out). He argued that ISPs were private businesses, and as such had every right to do whatever they wanted: the market should decide. Part of that conversation involved an explanation of WHY ISPs and telecoms got it wrong, and why trying to fix the problem from their end may be as futile as trying to stuff toothpaste back into the tube. 

Just to frame my thoughts on AT&T’s move, I’ve decided to copy over a part of the text from that exchange with my old college roommate. (The thread can be found on Facebook. However, my FB account is private so you probably won’t be able to see it. Sorry.) Here I talk about the magic of unlimited bandwith and how Time Warner tried resolving the issue. It should ring reminiscent of the current situation.

I notice that’s what’s not at question is the ISPs current (for the most part) structure of unlimited bandwidth, which IS being abused by, for example, those downloading hundreds of torrents (to use your example), which is way outside the norm (although I’m guessing a very large part of all torrents are actually copyright infringing and therefore illegal; I doubt there are that many people downloading Linux distros, as much as that would tickle my funny bone, and think they are instead downloading the latest leaked movie).

Of course, the reason for this “abuse”–and I’ll use the term loosely–is simple: ISPs have been selling themselves on “unlimited” for years, which for the layman is the equivalent of magic. For years they could make that claim because there was “no way anyone could ever use [X] amount of bandwidth!” (“No one will ever need more than 640k!”) Now that people can and do test the limits on that unlimited magic, via games and video and all that jazz, ISPs are starting to say “Maybe this wasn’t such a good idea.” Time Warner attempted to remedy this by creating bandwidth packages–use this much, pay this much, with an overage fee of this much–but with very negative results, probably because they started throttling customers who had already bought service at a certain price and under the condition of “unlimited”. The concept was good, the execution not so.

Despite disagreement to the contrary from many, given the capabilities of the Web, the model as it currently stands is unsustainable in the long run as more and more demands–video, gaming, and VoIP come to mind–will be placed on the network. (By the way, whatever happened with Google and all ther “dark fiber”?) Capping will eventually have to happen. This doesn’t prevent ISPs from simply selling more.

There’s a lot more to the text, but I don’t believe it’s immediately important to the matter at hand. (It involves net neutrality, and it has some pertinence to the issue which may not be directly evident.)

The Problem

As anyone keeping any sort of tab on the industry knows, AT&T has gotten its butt kicked time and time again because of the iPhone. Sure, it has the world’s most popular single smartphone. But it has long been lacking the infrastructure to support the iPhone’s data demands throughout most of its network. (With respect to Luke Wilson, it’s called the iPhone 3G, not the iPhone 2G/EDGE. AT&T shouldn’t muddy the waters by comparing its EDGE coverage to Verizon’s 3G.) The rate of upgrade isn’t keeping up to the increase in demands on their bandwith, so what do they do? The only thing they really can, cap it. The fact is that most users will probably benefit, at least in the short run, by getting lower prices. Yet as more and more services come to smartphones, and as we increasingly rely on these devices and devices like these (think iPad and other slates) as our primary computers AND entertainment–that is, our primary sources of media consumption–the cost to the user will increase, and because the infrastructure to not only support, but profit heavily from that growth will be in place, AT&T and any telecoms that follow suit will see their profits continue to rise unless customers move to providers willing to give them unlimited coverage

Will unlimited data plans be needed? Maybe. Will they be around? I think so, in one form or another. This will probably come when the technology is advanced enough that there’s no possible way that anyone could ever use as much bandwith in a certain period of time as it would cost to support it under a reasonable flat rate plan. But that’s only considering today’s technological requirements for transporting things like current games and internet video. Eventually this will go the way of the AOL dial up floppy, so there’s really no telling what requirements will be when we all regularly enjoy holographic projection or advanced forms of telepresence (holographic telepresence, maybe?). I’m guessing the arguments may sound very similar.

2 thoughts on “Why AT&T May Be Doing the Right Thing

  1. I wonder if this includes the unlimited iPad plan being offered at $30/month.

    Needless to say, any U.S. carrier’s “unlimited” plans, really aren’t. They all have fine print saying if you go over a certain amount they will cut you off. It sounds like AT&T is just finally being honest about it. The word “unlimited” is just a marketing gimmick that gives us consumers a warm and fuzzy feeling that makes it feel okay to hand over $100 a month to our cell phone carrier.

  2. IPads will have the “unlimited” option if bought before June 7. Otherwise, no, plan’s gone.

    However, as for the data cap on unlimited plans: somw companies say and mean unlimited. For example, Verizon has true, unlimited, with a few caveats. First, it must be smartphone data. No tethering. (Tethering plans are limiited to 5gb/month.) Second, if you go above 5gb, they WILL start taking a close look at you. If they see tethering activities (watching a bunch of Netflix movies on your Blackberry, for example) then they’ll charge you an arm and a leg. Third–and this is where the net neutrality portion comes in–they will limit the types of data you can DL/UL and the sizes. Ex: you can’t upload YouTube videos past a certain size w/o wifi. If they can control this they can control most of the traffic hard hitters. Provided there conditions are met, though, your data plan with them truly is unlimited.

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