How Not to Announce New iPhone Data Plans

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.}