Most of you have already read the
details of AT&T's pricing announcement of last week. There are some clear advantages and
disadvantages of the new approach. On the plus side, AT&T has:
the entry price for wireless data, thus opening up important new
segments and making data more affordable at the low end;
a more favorable price point ($14.95) to add additional
data services, which I think will be especially important for
and families; and
the tone for greater awareness among users of how much data they
consuming, the undercurrent being that even with all these
devices, wireless economics are different from fixed broadband
economics. Those who are concerned about overage will think more proactively about using WiFi where available.
This is a good start, and is the opening
salvo in what is
sure to be a new wave of pricing activity in the industry over the
months. But now that we're headed down this road, I do have some thoughts on what could be done differently. Here are some thoughts:
AT&T is trying to keep it simple, with its approach of adding 200 MB
increments for those subscribing to the $14.95 plan. However, 200 MB
who go over their allotment are then paying $30 for 400 MB
total, compared to
$25 for 2 GB for those on that plan. The $15 for an extra 200 MB makes even less sense
looks like gouging) when 2 GB plan users only have to pay $10 for an
additional 1 GB.
AT&T would argue that those who
consistently exceed the
200 MB limit should upgrade to the 2 GB plan. I'd like to see the option
what I call "plan optimization": go over the 200 MB limit, and you can
to upgrade to the 2 GB plan for that month - which can then either
permanently or revert back to the plan. This would give AT&T greater
opportunity to upgrade users on a more proactive basis, rather than
over constant overage of the relatively paltry 200 MB increments.
Very heavy users will pay a lot more
than they do today. 5GB
of iPhone usage (an unlikely number) will cost $60 -- the same,
its DataConnect 5 GB broadband plan.
Buckets of Shared Megabytes. Wireless data pricing, whether flat rate
or usage-based, is still
principally based on a per-device, per-subscriber approach. But the
individual/household owns multiple devices, with varying data
requirements and usage scenarios. Wireless operators in the U.S.
been hugely successful with family/group plans for voice. Why not take
approach for data? As the master account holder, I would buy a "bucket"
(or likely GB), which could then be shared across multiple members and
in my household. This would be great for additional household members,
as for devices with different usage profiles. A smartphone is going to
more persistent need to connect to the cellular network; but devices
iPad, portable gaming device, or even a laptop might have more
occasional, cellular connectivity needs.
Allow Multiple Devices to Connect. As a corollary to the "bucket" plan
don't believe users should have to make individual data plan decisions
and every wireless-enabled device they own. A broadband subscription can
shared across devices, and an iTunes service can be shared across
Operators have gone "half-way" with cellular data, allowing other
draft off a primary device (or MiFi) using WiFi. I'd like to users
be given the ability to authorize up to a certain number of devices that can share in a data
A side benefit of this is greater stickiness to a carrier's data
there would be less incentive to shop around for a lower, or prepaid
another operator for a device with less need for a persistent cellular
What About Broadband?
The plans AT&T announced last week were aimed at smartphones. Lens
readers know I have long been advocating for lower, more flexible price
for mobile broadband from laptops. T-Mobile and Metro PCS have led the
lower prices, and there are some good prepaid options (per
Virgin Mobile and Verizon Wireless. But with the delta shrinking between
computing device and phone device, and products such as the iPad that
in-between, I believe having a separate, significantly premium-priced mobile broadband
makes less sense.
AT&T's broadband plans now look
downright wacky. 200 MB
for iPhone users costs $15, but it costs $35 for laptop users. Huh?
Start Thinking Anew About Voice and
Text. Messaging has been a cash
cow. Text plans remain
incremental to wireless data subscriptions in most cases. Lines are
however, between messaging of various forms - voice, e-mail, text, IM,
social networks. Today's user accesses Facebook, Twitter, or LinkedIn
data account, but must pay extra for SMS and MMS. There will be tension
as users add multiple devices to the network, as smartphone adoption
to the younger, text-centric segment of the market, and as
start really examining their total monthly spend.
It is time to start thinking about
how legacy messaging
and voice plans are going to be "sunsetted", in a 4G, "everything is IP", multi messaging platform
The subscriber relationship will be less about discrete services
(voice-messaging-data) and more about a "connectivity" plan that is
across multiple devices and users. This will require tough decisions
legacy - and highly profitable - plans.
Make Some Moves in the Enterprise. Enterprise pricing has not changed
the past three years. While this segment remains higher margin, I do
two moves are needed. First, mobile broadband pricing needs to be
to be more in line with smartphone pricing, especially since tethering
have expanded. There should also be more prevalent plans that provide
pricing flexibility for occasional/infrequent users who represent the
phase of growth for the market.
I'll have more to say about this in a future Lens. But
dawn of usage pricing, operators have an interesting challenge with
customer education. AT&T has developed the right "early warning"
protect consumers (and themselves) from bill shock. However, truly
data consumption is tricky. Sometimes it is obvious, such as downloading
program from iTunes. But there's murky ground with respect to:
content. It's one thing to go to YouTube...and another to play
content within an app, such as a video clip on CNN.
requiring persistent connectivity. A good example here is
using location services, such as navigation. Also, it's not always
when one is actually "connected" to the network. Does my RunKeeper
stay constantly connected, for example? And what about integrated
messaging services that are constantly sending information to and
Facebook, Twitter, and the like?
the air synchronization. More and more services are using over the
synchronization, for example managing e-mail, contacts, and
the "cloud" such as Gmail and MobileMe.
- Advertising. Ads to count against the data buckets. It's not an issue right now given current consumption patterns - but with more sophisticated, multimedia ads being developed for mobile, we'll have to keep our eye on this.
The operators have developed some
reasonably good tools:
AT&T has usage scenarios and a pretty nifty "Usage calculator", which shows how moderate usage of anything multimedia
to 2 GB pretty fast. The more troublesome area to predict consumption is
apps requiring more persistent connectivity, as stated above, and the
that the customer is not always in control of their data consumption, such as when they are sent large files,
attachments, video ads, and so on.
Operators need to make these tools
prominent, especially via
collateral, at the "My Account" site, and at point of sale. I would also
recommend adding more functionality to the "early warning system" For
inform users of high-usage apps; warn them if a file they are about to
is above a certain size; or recommend for certain downloads that they
At point of sale, or when signing up for data service, there can be an
for users to opt in to this early warning system, similar to what they
for privacy settings.
It will be interesting to see what other
operators do. I
believe Sprint and T-Mobile will stick with aggressive "unlimited"
plans, to maintain competitive advantage in the marketplace. Plus, their data
are less taxed at the present time. For Verizon, which has intimated it
migrate to usage-based pricing, the question is whether it will take the
"airline" approach of mimicking AT&T's plan or whether it might do
something a little different. I'd bet on the latter.