Wednesday, Dec 16, 2009
AT&T has recently complained that their network is congested because 3% of their data plan users are responsible for 40% of their data network traffic, and have indicated that consequently they'll be raising the rates on that 3%. Three thoughts: If you're moving from a flat rate to a tiered rate in order to make sure the average user doesn't have to pay for the high-volume user, then a rate increase for high-volume users should be paired with a rate decrease for average users, right? I would bet good money that the bottom 40% of AT&T data plan subscribers account for less than 3% percent of AT&T's bandwidth. Where's their savings? If AT&T actually wanted to recoup losses from that 3% of users (who each, on average, use 21.5 times the amount of traffic as a user in the other 97%) they'd have to charge those users 10-20 times as much for their data plan. That would mean that three out of every hundred AT&T users would need to pay $300-600 per month for data. Clearly these users wouldn't stand for fees that high, which indicates that the purpose for tiered pricing isn't recouping costs, but is instead dissuading people from using their data plan 'excessively'. As the trend is for more and more interactivity and high-bandwidth applications, the carrier who actively promotes the features of phones with the capability to take advantage of high-bandwidth applications like video while actively dissuading its users from actually using those features once they're locked in to a contract is a carrier doomed to failure.
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