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How Not to Announce New iPhone Data Plans

By - Source: Tom's Hardware US | B 59 comments
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AT&T’s recent announcement of changed pricing for its data plans caused enormous outrage and it almost seems like AT&T did not see this one coming.

In the end, didn’t AT&T announce cheaper data plans? What could have gone so terribly wrong that everyone is now upset with AT&T, if the company wants to save us money? Well, a lot went wrong. Lesson learned: If you try to deceive your customers you have to be a bit smarter than this and if deception is not your intention, keep your message simple and straight forward and avoid confusing your customers.

AT&T’s message was a heartwarming one. The company announced a price reduction of data subscription plans. How nice. But then, if you haven’t been living under a rock for a while, you simply know that the cellphone industry needs to squeeze more money out of data plans to keep revenues growing and investors happy. In AT&T’s case we also know that the $30 per month flat fee was generally accepted. So why would AT&T lower the price? Suspicious? Yup.

Let’s see. AT&T graciously offers a cheaper data option plan for only $15 per month, which includes 200 MB of data. If you want more bandwidth, you can opt for a 2 GB plan for $25, which is less than the current $30 all-you-can-eat plan. AT&T said 65% of its smartphone users use less than 200 MB and should save 50% of their data plan cost now. 98% use less than 2 GB and should still save $5 every month. Of course, “smartphone users” does not mean “iPhone users” and we have no idea how this new plan applies to iPhone users.

The outrage over this move was overwhelming. Interestingly, most people probably do not even know how much data bandwidth we use. 200 MB, according to AT&T is enough “to send/receive 1000 emails (no attachments), plus send/receive 150 emails with attachments, plus view 400 Web pages, plus post 50 photos on social media sites, plus watch 20 minutes of streaming video.” I am not sure about you, but that seems to be a bit below my personal usage. No problem, says AT&T. If you exceed 200 MB you will get another 200 MB for another $15. Thanks … oh, wait: This would be $30 for 400 MB while I had unlimited data for the same $30 before? Could it be that this is a possible price increase and not so much a price reduction? Sure, if you are a heavy user you can always switch to the 2 GB plan and according to Ars Technica, it seems that 2GB is more than enough. Today.

Is it just me or is it suspicious that this new plan is in effect on June 7, the day when we expect a new iPhone to be announced? Why would AT&T cap its data usage on that day and implement it as an obvious note to its customers to watch their data consumption? Is it reasonable to assume that the new iPhone may have some new data applications in place? Rather running the risk of network outages, does AT&T send a subtle message to cool it down and use data carefully?

There is a good chance that this new iPhone will make use of this pretty new screen and goes into HD movie streaming. There is also a good chance that there will be video conferencing. And Skype is now available as a VoIP over 3G service as well. We could be changing our user behavior dramatically as we are going more and more mobile and it appears that AT&T simply wants to protect itself or cash in on this opportunity, depending on your view. So it was a great idea to scrap the unlimited data plan and introduce two new limited plans. That’s fine with me, but could we expect AT&T to actually be honest and simply say that bandwidth usage has become unbearable because of some users and that there is a need to change the model because of that? Selling these new plans as a general price reduction is deceptive and confusing at best. Especially if you go with the 200 MB plan and enjoy those great new high-bandwidth features and end up begging AT&T’s billing department to have mercy with your credit card limit.

Let’s just call it what it is. For a sizable share of AT&Ts smartphone users, it will be a price increase, particularly if Apple introduces new data features. It is especially painful for iPad users whose $29.99 unlimited plan is now replaced with a 2 GB $25 plan (however, existing iPad customers who have the $29.99 per month unlimited plan can keep that plan or switch to the new $25 per month plan with 2 GB of data.)

AT&T praises itself by stating that it now offers “more choice”, while it forgets to say that it removes predictability of billing, one of the issues recently criticized by the FCC. “AT&T helps mobilize everything on the Internet - your favorite web sites, TV shows, music, games and social networks. Virtually everything previously done while sitting at a computer can now be done on the go,” said Ralph de la Vega, president and CEO, AT&T Mobility and Consumer Markets, in a prepared statement.

This statement must feel like a slap in the face to many AT&T customers. Ralph, if you help mobilize everything that “was previously done while sitting at a computer”, why do you guys then remove a flat fee model? Doesn’t the elimination of the flat fee plan promote exactly the opposite and tells your consumers not to do “everything” mobile? In a certain way, AT&T leverages the sense of fear of unpredictable cellphone bills and most certainly hopes that you will exceed your limit every single month. 

He continues: “To give more people the opportunity to experience these benefits, we’re breaking free from the traditional ‘one-size-fits-all’ pricing model and making the mobile Internet more affordable to a greater number of people.” Sure, Ralph, whatever you say. How stupid does AT&T’s PR department think its customers are? Taking advantage of all benefits of a new, much more data centric iPhone would certainly require an unlimited data plan, simply because consumers need a sense of security that AT&T won’t empty their bank accounts at the end of the month.

The icing on the cake is AT&T’s generous new tethering plan, which is now priced at just $20 extra per month. Tethering comes right out of your 2 GB budget (while a previous more expensive plan bought you an extra 5 GB) which means that you need to be careful using that bandwidth.

Sorry, AT&T, this was a classic shoot-yourself-in-the-foot case. If you need to increase the price, then call it a price increase. If it is necessary to remove the flat fee plan, fine. But don’t tell me that your service now allows me to take everything I do on my desktop into the mobile world.
AT&T is the last service I would choose to do that.

Wolfgang Gruener is a technology journalist and analyst. He was managing editor for the Tom’s Hardware news section from 2003 to 2005, before launching and acquiring TG Daily. Today, Wolfgang works with startups and publishes his thoughts and analysis on critical and emerging technologies and products at Conceivablytech.com.

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Top Comments
  • 25 Hide
    borisof007 , June 7, 2010 9:15 PM
    "AT&T is the last service I would choose to do that."

    And it's exactly why I have a Droid on Verizon
  • 23 Hide
    polly the parrot , June 7, 2010 9:14 PM
    Sounds like someone just doesn't want to make their network decent.
  • 18 Hide
    afforess , June 7, 2010 9:20 PM
    I don't think there is anything wrong with pay-as-you go for internet bandwidth plans... In general. If ATT had offered the 2gb plan for $15, and a 10-15G one for $25, I doubt we would have as much outrage. Offer sensible price points at sensible bandwidths, and we'll be happy. Try to shortchange us...
Other Comments
  • 23 Hide
    polly the parrot , June 7, 2010 9:14 PM
    Sounds like someone just doesn't want to make their network decent.
  • 25 Hide
    borisof007 , June 7, 2010 9:15 PM
    "AT&T is the last service I would choose to do that."

    And it's exactly why I have a Droid on Verizon
  • 2 Hide
    bhaberle , June 7, 2010 9:16 PM
    Thank you...
  • 9 Hide
    nforce4max , June 7, 2010 9:18 PM
    AT&T the greedy BP (Blind Profit) of the telecoms industry.
  • 9 Hide
    dochood , June 7, 2010 9:20 PM
    I just downgraded myself and my son from the "unlimited" plan to the 200 MB per month plan. I have used 800 MB on my phone over the last year and a half, with my peak month being at 85 MB. I use WiFi much more than 3G, which seems awfully slow, anyway. I don't see the need to pay $360 per year for service we aren't using.
  • 18 Hide
    afforess , June 7, 2010 9:20 PM
    I don't think there is anything wrong with pay-as-you go for internet bandwidth plans... In general. If ATT had offered the 2gb plan for $15, and a 10-15G one for $25, I doubt we would have as much outrage. Offer sensible price points at sensible bandwidths, and we'll be happy. Try to shortchange us...
  • -6 Hide
    builderbobftw , June 7, 2010 9:22 PM
    "But don’t tell me that your service now allows me to take everything I do on my desktop into the mobile world"

    Not realy.

    Mobile platforms remain very limited in thier functoinality. YOu can't type out fast enough, or comfertablly, and you can't do anything that requires CPU or GPU intensiveness.
  • 4 Hide
    cadder , June 7, 2010 9:24 PM
    AT&T must be real happy with the new netflix app announced today. How much bandwidth does one movie use? (Since that same movie in low def. would come to you on a 6GB DVD, that might be a clue.) Now step up to HD video and the bandwidth usage goes way up.
  • 7 Hide
    captainnemojr , June 7, 2010 9:25 PM
    Well put. AT&T's network = fail. Basically, they can't handle all the bandwidth people are using or soon will be, so rather than upgrade the network, they just charge more for less and keep the same crappy service. Sad when it's investors > customers when it should be the other way around.
  • -2 Hide
    thestrangebrew , June 7, 2010 9:25 PM
    I always go over these thresholds every month as I like to watch vids and check out various forums. I read the option for ipad owners to keep their unlimited plans but is this an option for 3g users as well?
  • 3 Hide
    AMW1011 , June 7, 2010 9:29 PM
    Both Sprint and Verizon have been tested to have FAR better coverage and reliability, and both average faster 3G speeds than ATT. Sprint is also pulling out the 4G goodness.

    So why does anyone buy a smartphone from ATT?

    I'm not about to go gaming online with my $1500 gaming rig if I had 56k dial-up!
  • 8 Hide
    sinsear , June 7, 2010 9:29 PM
    Can't wait 'till 4G is out and a 2gig plan will be eaten up in under a week....
  • 1 Hide
    kinggraves , June 7, 2010 9:30 PM
    I wouldn't even mind if they increased the fees, if those fees were going towards improving their network for the future. I just don't really like my money going towards the multimillion dollar bonuses the CEOs write for themselves. If they had been good enough execs to deserve it, they would've foreseen the continually increasing demands on their networks.
    It's not going to matter much if your phone can stream HD if they can't support everyone using it.
  • 0 Hide
    husker , June 7, 2010 9:30 PM
    dochoodI just downgraded myself and my son from the "unlimited" plan to the 200 MB per month plan. I have used 800 MB on my phone over the last year and a half, with my peak month being at 85 MB. I use WiFi much more than 3G, which seems awfully slow, anyway. I don't see the need to pay $360 per year for service we aren't using.

    Make sure that you also sign up for the added service where you can cap the MB your son uses to ensure he doesn't go over to 200MB limit. That service is yet another $5 or $10 a month.
  • 3 Hide
    matt_b , June 7, 2010 9:30 PM
    It's not often you witness a Captain trying to sink his ship. I am an AT&T customer and am actually rather happy with them in my area. I can however relate to those affected and just seeing the changes makes me aggravated even though I don't have an iPhone/data plan. In a world of competitiveness, these guys really are not looking in the right direction and haven't been for several years now!
  • 1 Hide
    jacobdrj , June 7, 2010 9:31 PM
    I think iPhone owners have been quite forgiving (perhaps in part due to their ignorance). Almost every feature expected to come through jailbreaking did come eventually (for the most part).

    I think if AT$T decided to advertise that they were taking these new bandwidth plans and promising to use that money to invest in a better implementation of 3G and/or a new 4G network, I think iPhone customers would be happy to play along.

    Smart phones, IMHO are still in their infancy, and infrastructure is a big part of why that is.
  • 1 Hide
    ananke , June 7, 2010 9:37 PM
    It seems Sprint + EVO; Sprint + WiMax are the only feasable data centric paths...I personally believe that Verizon + iPhone will bring tiered pricing too.
  • 1 Hide
    captainnochords , June 7, 2010 9:38 PM
    Hopefully this will fail and provide an example for why this model should not be applied to broadband internet either.
  • 0 Hide
    RADIO_ACTIVE , June 7, 2010 9:38 PM
    I think I may go over the 2gig limit lol! Who knows when my iphone stats were last reset but I have 31 gigs of data usage lol. I have only had the iphone since last August. Damn my bill will probably be higher!
  • 3 Hide
    hoofhearted , June 7, 2010 9:41 PM
    Since when do you have to pay for tethering?
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