Sunday, February 28, 2010

AT&T's Missed Opportunity on iPad Pricing

I rarely have nice things to say about AT&T, so I want to praise them when they actually do something right. The announced prices of their data plans for the upcoming iPad are very fair and reasonable, especially in the current marketplace. It also shows some smart corporate thinking. They were willing to be very competitive to get in on the ground floor of the iPad. Here's an older story that talks about how AT&T stepped up to the plate to outbid other competitors:

AT&T Brought It's A Game to iPad Bidding

In some ways, the pricing on data plan doesn't seem very generous or groundbreaking. AT&T already charges $29.99 a month for unlimited data on iPhone. Why should it be anymore on the iPad? However, AT&T gets a lot of extra cash from each iPhone it services, both for voice and texting, so if it charged extra for just data on the iPad, that wouldn't be unreasonable. As the story points out, current data only plans offered for laptops and other devices are across the board higher per month for comparable access. Also, it's very likely iPad users will consume a lot more data that iPhone users, so keeping it at $29.99 unlimited is a good deal.

The $14.99 for 250 megs is a little less of a great bargain, because, as a recent Los Angeles Times story points out, almost every real user will quickly go over it and need to pay the higher rate. However, there's no crime in providing a lower cost option (be nice if there was one for the iPhone). And it can be argued that it is a good deal for someone who rarely uses anything but their wifi connection, yet wants the option of cell service in an emergency.

So all in all, kudos to AT&T brass for their upcoming iPad deals!

Of course, this being AT&T Critic, I can't leave it at that.

First, history would seem to indicate AT&T is an evil conglomerate run by soulless machines that only do nice things briefly if it furthers their goal to take over the world and destroy the internet as we know it. (That is, by getting rid of net neutrality.) So, it might be tempting to look at this as temporary effort at fairness and competitiveness that will only last long enough to get them market share, destroy their enemies, and install themselves as gate keepers so they can later create misery by raising rates. Kind of like the cable companies. It's certainly a possibility.

Or, it might be a classic example of a headless, clueless corporation whose executives have no long term plans and simply were forced by Apple to make a competitive offer without any idea of it's longer term implications. This also seems likely, since the pricing plan is completely in contradiction to AT&T's public claims that high data use cannot be sustained unless they "educate" the public to accept tiered pricing. If the public needs to be educated, why not start on the iPad? And if high data use is a big problem, how does AT&T expect to handle millions of new iPad customers on unlimited plans?

The truth is probably somewhere between all these, AT&T is an evil, but clueless, corporation that knows it must be competitive if it wants to be in the iPad business.

The shame here is that AT&T is losing another opportunity (like the one it squandered with the iPhone) to change it's corporate stripes and prepare to compete in the new world of technology. You know, the one where customers expect stuff for free, or low cost, and then reward companies by spending extra money later on stupid things like ring tones and apps that tell jokes.

In particular, the data limit on the lower priced $14.99 plan, while being perfectly fair, is shortsighted. The data cap is deliberately pegged to be something a normal user will have to go over eventually, if not frequently. The Los Angeles Times article points out that the average iPhone user consumes 273 megs of data a month. (Which, by the way, blows holes in AT&T's complaints about a data hog crisis.) So why did AT&T pick a 250 meg limit on the lower priced plan? Because it forces everyone into the higher priced plan.

Now, as I said, this is still a fair business deal. If you're unsure whether you need a connection, or really aren't planning to use it much, $14.99 provides an option, and there's nothing better than customers having options. The problem is, AT&T doesn't understand that you don't want to needlessly bleed your customers. Keep your customers happy, and in the long run, they will reward you.

In the real world, anyone with the money to spare, will probably pay for the higher plan without blinking. And use it. People who are hurting for money, will go for the lower plan. Unfortunately, most of them will quickly find out they go over the limit, and have a choice to make. Dump AT&T all together, or pay more.

This is a mistake. The biggest danger to AT&T is not that it doesn't make enough money from the lower priced plan, it's that the average iPhone user decides they don't want to pay AT&T at all. The iPad, unlike the iPhone, is really a very useful device that is best used with a wifi connection (either free or part of someone's home or business connection). People who don't have a lot of money will be sorely tempted to avoid AT&T all together. And they will be able to do it. This puts further pressure on AT&T's corporate efforts to "educate" people that data isn't free. (It is, AT&T just doesn't want you to know it is.)

It remains to be seen whether the iPad is a device that sits in peoples home's and offices and works perfectly fine without an AT&T connection, or whether it's so useful on the road that it's worth an extra $29.99 a month. AT&T's pricing could actually effect the future of the iPad, as customers try to figure out how best to use it, and software makers design apps based on customer expectations. My guess is that AT&T could potentially train millions of customers not to use their service, simply because they have too low a data cap on the lower priced plan. Millions of businesses, that might be willing to foot a $14.99 bill for their employees to have internet access, might balk at $29.99.

In fact, it might be better for AT&T simply not to even offer a $14.99 rate that customers will quickly find doesn't fit their needs. While corporate suits might like it when customers are suddenly forced into a higher bill, working people don't. From a PR standpoint, AT&T is opening itself up to a lot of complaints by new customers what find out that watching a 3 minuted Epic Beard Man video is just enough to push them over the limit.

A fairer rate would have been 500 megabytes. That way the thrifty iPad user could reasonably function at the cheaper rate. And high end users would still pay for the extra data. Moreover, the iPad is unlocked. Whether AT&T faces any real competition for customers will depend a lot on how happy customers are with AT&T service. Having a large base of customers begin their relationship with AT&T by finding out that $14.99 is just a fake out to lure them into a higher priced plan is not a good start.

But offering a real deal, to keep long term customers happy and to build a happy customer base, is the kind of Net 2.0 thinking AT&T's leadership still hasn't clued into. Back in the AT&T board rooms clueless execs rub their hands with delight. "See, it's great, they get into the lower priced plan at $14.99 and POW, they go over the data rate and KABOOM, pay $29.95! It's genius!"

But this kind of thinking, how much can we rip away from customers pockets for nothing, is a serious problem at AT&T. (The actual price of providing 500 megs vs. 250 megs is nothing, and the difference between providing a customer with 250 megs or unlimited is pennies, certainly not $15.) Instead of thinking of a customer paying $14.99 as someone who is paying $15 too little and needs to be punished, AT&T should think of them as someone who they might lose if they don't provide a realistic option. That $14.99 customer is someone they can try to encourage to use other services, like AT&T's mapping and family tracking apps.

Oh, but those apps are crap, right? And cost too much. Well, maybe that's the real problem. A modern Net 2.0 company loves to have regular customers, at any price, and then use the data to figure out what to sell them. Rather than trying to cap usage, AT&T needs to invest some R&D on coming up with must have services and apps. The real way for it to make money is for a customer to sign up for $14.99 a month, and then also buy five apps from AT&T for $4.99 each. And sign up for a special music channel at $1.99 a month, etc.

Then when the person gets a raise, they'll bump up to $29.99 for unlimited data. Or have kids and buy them all iPads, or recommend AT&T to friends because it's such a good deal. The fact is that people like to spend money. And if you provide them with something they like, odds are they'll give you as much money as they can spare. You don't have to try to beat it out of them or trick it out of them.

Back in the 1970's, that kind of negative business thinking, that the customer was an enemy you had to game, was very popular in corporate America. And it really screwed things up. It's a shame it seems that the leadership behind AT&T still pines for those days. They don't appear to understand they are in a very different world where customers are empowered with information and options like never before. Hopefully, AT&T execs will eventually figure that out and turn toward the light.

Friday, February 26, 2010

Big Surprise: Most iPad Cell Customers Will Have to Pay for the Higher AT&T Data Plan

The Los Angles Times has a good piece that estimates that most iPad users will quickly go over AT&T's lower priced $14.95 a month rate with the 250 Megabyte limit:

So basically, anyone that actually wants to use their iPad will have to pay the higher $29.95 a month for the unlimited data plan.

I'll be writing another post about this soon…

Sunday, February 21, 2010

AT&T Hungers for Tiered Pricing Like The Dark Lord Hungers for the One Ring

There is no logical basis for tiered pricing of data, including phone calls, texting, and internet access. Data is not like water, or even electricity for that matter. It doesn't cost significantly more to provide unlimited amounts once you have build out the capacity for it. The costs of keeping track of, billing and limiting data is far greater than the marginal costs of providing unlimited data. (This is, of course, one of the key points of net neutrality.)

Customers also hate tied pricing and unpredictable billing associated with it. In fact, customers hate is so much, they will go to great lengths, to avoid it. Companies that only offer tiered pricing are always beat by companies that offer fixed pricing. So it's only when customers don't have a choice that they will reluctantly accept tiered pricing.

Despite all this, AT&T (and Verizon) are desperate to fight the battle against fixed pricing (unlimited plans) and institute tiered pricing over the wishes and best interests of their customers. They talk about "data hogs" but what they really want is to bleed customers like stuck pigs. Unfortunately, they haven't completely been able to buy up all their competition and force customers to accept tiered pricing, yet. But they're working on it.

In the meantime, they keep trying to float the "tiered pricing" trial balloon in the media, always with embarrassing results. Never-the-less, their PR flacks are ordered to keep trying and so we get this completely fake "news" story planted in the Chicago Sun Times today that says fixed pricing's days are numbered:

So what's the news here? Nothing. In fact, all evidence points to the opposite of what is being "reported." AT&T and Verizon are expanding unlimited plans, not shrinking them, and MetroPCS seems to think phones with unlimited talk, text and data should only cost $40 a month (they even pick up taxes).

The only "evidence" provided that tiered pricing is needed is that "3 percent of smart-phones account for 40 percent of traffic on AT&T's network." Of course, the truth about this statistic is that 97 percent of AT&T smart phone customers aren't using their phones as much as their phones are capable. That is, most people are playing a lot for 24 hour access to data they never use. This is the truth behind fixed pricing. That people end up paying extra for stuff they don't use. 97 percent of people in this case. That's why AT&T is hugely profitable right now.

So what are the sources to prove that "tiered pricing" is inevitable? A months old quote by AT&T exec Ralph de Vega which he has already half retracted and an analyst who offers "The main point is to start to educate customers away from what they were trained to think…"

How can they be educated by AT&T to stop thinking they don't want to pay wildly fluctuating bills? With fake news stories about a fake upcoming crisis that will require tiered pricing?

Right now, AT&T is the most profitable cell phone provider primarily because it is making tons of profits off the iPhone. The iPhone offers fixed pricing on internet access (something Apple insisted on) and AT&T wants to kill that. It knows it can't now, but it wants to in the future. So it thinks it needs to lay the ground work with fake news stories so later when it takes over smaller companies, kills competition, and gets government to support anti-competitive practices it will be in a position to force tiered pricing as "necessary."

It is staggering that the leadership of AT&T cannot understand that simply wanting something is not the same as needing something. And that there are things you might want that are bad for you. Like bleeding your customers dry for no reason other than short term profit gains. They seem oblivious to the history of business and technology that shows time and time again that companies that fight against the best interests of their own customer ultimately lose. If AT&T got what it desired, a monopoly on cell phone traffic and tiered pricing, it would create a massive market for a new technological breakthrough that would provide fixed pricing to customers who dumped AT&T. If it wasn't for it's lucky deal on the iPhone and Apple's foresight in insisting on fixed pricing for the iPhone data, AT&T would probably be bankrupt now. That it is unable to understand it's good luck with iPhone and learn from it, is staggering.

But since AT&T isn't capable of thinking like a new technology company, and focusing on innovative ways to serve it's customers better, it instead wastes valuable resources planting these fake news stories in dying media like newspapers. The purpose, of course, is to try to confuse the issue enough so AT&T can make backdoor deals with the FCC and other carriers and force tiered pricing down customers throats.

The brass ring for short term thinking AT&T execs is not getting the 3 percent of "data hogs" to pay more. Those tech savvy high use users will be the first dump AT&T if it has anything truly resembling real tiered pricing. The goal is to force those 97% of people who don't use a lot of data to occasionally pay extra if they bump over a fixed limit. Much as AT&T likes to talk about billing people for data "like water" the reality is people will simply stop using their phones much if they have to pay for every bit. The goal is to create occasional billing spikes when a customer does something unexpected to bleed an extra twenty bucks out of someone who is already struggling with monthly bills.

It won't work and AT&T probably knows it won't. But their leadership probably thinks it's "worth a try." After all, they confused people for a couple decades with bullshit billing for "minutes" and "rollover minutes" and "nighttime minutes." Why shouldn't it work again this time? But let me be the first to tell them that really need to knock this off. This is not 1970. Whether AT&T gets it or not, they are at a technological crossroads. And if they don't get their act together soon, they will be left behind like AOL, GM, and other big corporate dinosaurs who stopped serving their customers and thought their customers should serve them.

Wednesday, February 10, 2010

Google's High-Speed Networks Threaten AT&T's Future Plans

The United States has the worst broadband network, in terms of coverage, speed and customer pricing, of any advanced nation on the planet. We are well behind Japan, Korea, most of Europe and even much of the Middle East. This is not an accident. It is a direct result of lax government regulation that has allowed cable companies and telecoms to buy up competition and raise prices without regard to service. Part of the business strategy of these broadband oligarchies has been to deliberately limit the speed of their networks until their dominance of the market is secure. Their dream then is to charge per data bit (tiered pricing), in total disregard to the real economics of providing service and the well being of their customers. They will have then achieved an evil businessman's dream come true. They will be charging people for literally nothing, since the cost of providing 20 bits is really nothing more than 200.
If these companies had gotten a hold of the internet at its beginning, it never would have happened. They would have killed it in the cradle through their greed. In fact, the internet came about primarily because big corporations, who could have easily set up their own proprietary networks early on, couldn't provide services anyone was interested in paying for. Those corporations that tried, like AOL, failed. Cable companies have a unique opportunity, through their municipal monopolies, to provide high speed networks at a low cost with great content. They are losing the battle to a free internet filled with pictures of cats. They simply charge too much, and provide too little. Everything is moving rapidly to the internet, and they know their future will be simply providing access to it.

Meanwhile, telecoms like AT&T with national networks of cell phone towers, also have a unique opportunity through virtual monopolies to provide proprietary networks with services and content that could easily compete with what is offered free on the internet. But they can't. So the future of the cell phone tower business is also simply as a means of providing access to a free internet. But they want to charge as much as possible for it, and their business plan is to limit speed and access until they've figured out the highest possible profit margin.

Left on their own, cable companies, and big telecom would kill or hobble the internet of today as a teenager. But there are other big companies that simply have too much to lose by handing over the internet to clueless corporations that want to charge for air simply because they are good at lobbying government.

Thus Google has been forced to get into providing internet service:

I think this is the last thing Google wants to do, they would prefer a competitive marketplace they have nothing to do with. But because the United States is falling further and further behind in the basic technology of the internet, they have little choice. This is clearly a shot at over the bow at AT&T and the cable providers. A warning that they need to change course.

Otherwise Google will step in and change it for them.

I'm sure AT&T, Verizon and Comcast and the others will work frantically to try to stop Google's initiative. Working behind the scenes, they succeeded in killing various US cities efforts to provide low cost citywide coverage. All sorts of pressure will be brought to bear against Google to prevent them from entering this market. And it might work.

But ultimately, their efforts will fail. The United States cannot continue to exist as a major world power with a third world broadband. If Google doesn't step in, Apple will, or Microsoft or some other big company. If that doesn't happen, small cities will finally do it on their own. (As they probably should have to begin with.)

Because the technology for providing quick and virtually cost free broadband is getting cheaper every day. AT&T has huge advantages in being able to service customers, if they want to. They have a national network of towers, national business offices, servers, scientists, workers, etc. If they want to provide low cost access they can compete and beat anyone else.

But if they continue to act as if this is something difficult, or impossible, they will eventually be replaced by some geeks working in their garage. Everyday, the technology that would enable a small company to compete against these big conglomerates gets cheaper. It could start in one city, with a small company providing super high speed access for very little (as Google plans to do) and then another and another. It could happen with a company providing access to apartment buildings and small businesses. The threat is very real.

Google's shot at the bow should serve as a wake up call. Hopefully, big telecom will respond in the true American way, by competing and making it unnecessary for Google to move further into this market. But if they respond according to their tradition, which is to delay and confuse the issue by pressuring Google behind the scenes to retreat, they might dodge a bullet to their arm by moving into one that gets them in the head.

UPDATE: BoingBoing posts that Google also has made available a ISP speed tester so the average person can find out how their network speed stacks up.

AT&T To Remain Exclusive iPhone Carrier Through 2011?

This is all over the internet: rumors that Apple will stick by AT&T as the exclusive carrier until at least 2011.

There's a good case to be made for Apple waiting to dump AT&T, especially with the iPad coming out. Apple's selling iPhone's like crazy, making money like crazy, and will have its hands full gearing up to meet iPad demand. No particular reason to rock the boat now. Except iPhone customers hate AT&T, but so far, they don't really blame Apple.

For AT&T, this is good news for continued high profits. But there's danger here too, unless AT&T finally get's it's act together and fixes it's service problems. iPhone customers are really pissed off, and increasingly becoming active about their unhappiness with the status quo. The danger for AT&T is that they get the ear of regulators and this becomes a national consumer issue, which it should be. AT&T has other issues it would rather have government focus on then why it has a monopoly on the iPhone and can't service it.

It won't hurt Apple if the government steps in and forces it to dump it's exclusive rights deal, or come up with a new national broadband policy that allows customers to freely move devices between carriers (and forces carriers to adopt a universal standard). It AT&T doesn't want regulators to step in, it needs to take advantage of this opportunity to really improve service.

Sunday, February 7, 2010

FCC Looking to Take Advantage of iPad "Crisis" to Give Away Spectrum

Remember back in 1996-1997 when the internet crashed because AOL allowed it's customers unlimited use? Oh, you don't? Well, surely you remember the headlines all over the media because AOL dial up customers experienced service outages? Oh, don't remember that? Do you at least remember the important FCC "hearings" on the issue? Do you remember AOL? They were like this big company that dominated internet access and… well, they offer free e-mail service now. You see AOL originally charged per bit and in 1996… oh, forget it.

Well, the FCC remembers! And the "crisis" of 1996 for AOL dial up users experiencing outages still rings in their ears like yesterday. No one at the FCC forgets the compelling testimony at the "hearings" on the issue. A tearful witness confessed that when they wanted to find out if "they had mail" they had to dial up repeatedly.

Thankfully, under the relentless scrutiny of FCC "hearings," some bright scientists at AOL were able to solve the crisis by "upgrading their modem and server capacities." Who would have thought?! Okay, so here is where I need to get a little technical, so try to keep up with me. You see, modems are these things that send bits of data across the internet and servers are these things that store information, or something. "Capacity" is a technical term a little too complex to go into here, but basically, more of it is better. "Upgrading" has to do with fixing stuff, often electronic things. Now, back in 1996, the internet was just beginning to take off. The concept of having to "upgrade" your "capacity" was almost unheard of. There was no way that a large company like AOL, that had been charging per bit to customers, could anticipate that demand would increase once they offered unlimited use, let alone that that demand might cause"outages." Further, no one could have imagined the solution would be to "upgrade capacity." Thankfully, the FCC had "hearings" on the issue and the problem was solved after much national hardship. (AOL anticipating customer demand for unlimited service would have been as unbelievable as AT&T imagining that millions of new iPhone customers would strain their systems.)

Well, with the coming of the iPad, bright eyed bureaucrats with long memories want to prevent another crisis. Solution, according to the FCC? Steal spectrum and give it to the big telecoms for nothing. Now, I'm not an expert on spectrum, but I suspect it has absolutely nothing to do with any issue AT&T might or might not have with providing service for the iPad. Or with AT&T's current problems servicing the iPhone. I suspect the solution to iPad demand might be that ground breaking idea from 1996 to "upgrade capacity." But even if there was any spectrum issues, it has utterly nothing to do with AOL's "historic" problems in 1996. (And the FCC can't think of anything else that has happened since then that might apply?)

AOL's problem was that it wanted to charge per bit (tiered pricing) and it's competitors didn't (because customers like flat rates). AOL waited far too long to switch over, and when it did, it wasn't ready. The real lesson of all this is that corporations shouldn't fight fixed pricing, and they need to be ready to service customers before they offer service. AOL didn't understand that, and it betamaxed itself.

Of course, that doesn't stop FCC bureaucrats in the service of big corporations from trying to use the hype of a new product people want to make unrelated changes in our nation's telecom policies to serve their master's special interests. And it doesn't stop corporate "Spin Trolls" from weighing in on the comments section to try to further the bullshit. Thus we have a "guest" comment on the FCC blog stating:

"I'm glad someone at the FCC finally understands… if we don't manage the wireless spectrum, either through tiered pricing models or forms of network management (i.e. Bit-Torrent curbs) we will end up with slow, congested, wireless networks."

First, Mr. De la Vega, if you're going to make anonymous posts, pick a clever female name and stop with the "guest." (But don't use your World of Warcraft avatar name!) Second, obviously, the lesson of AOL was that tiered pricing and limiting customers use of bandwidth DOESN'T WORK. Why would anyone suggest returning to 1995? My suggestion to AT&T is to learn from the AOL debacle and embrace customer's desires before you become a historical footnote. Like the 1996-1997 crisis that no one remembers.

Meanwhile, if the AOL crisis caused FCC hearings, why aren't they having them over AT&T's iPhone service problems? And if the FCC is worried about the iPad, why doesn't the FCC encourage the development of a national standard for wireless carriers so customers can switch easily between competing companies? Why is the solution always offered to any problem customers might have to either limit their options (with tiered pricing or denial of services) or give money to corporations (free spectrum)? How about a free market and free competition?

Friday, February 5, 2010

AT&T Still Doesn't Get It

AT&T is offering a nice little App on the iPhone App Store that helps families track each other on maps:

Now, most apps on the App Store are free and it would make a lot of sense for AT&T to just offer this app as a nice free service to it's loyal customers who pay at least $100 a month for their iPhone and if they're a family with more than one, then at least $200 a month (or $500 if they have a couple teenagers). So offering them a way to keep in contact, safely, is just good corporate policy. Making sure a customer's teenager isn't kidnapped is good PR.

Now, a lot of apps are offered for $.99 cents and if AT&T wanted to cover their development costs, no one would fault them for charging a buck for something so useful. And of course, really great apps cost as much as $9.99 to download, and if you really care about your kids, (or whether your husband is cheating on you) that doesn't seem too much to pay.

So what does AT&T charge for this nice little app?

They want $9.99 A MONTH. Do I need to say anymore? Do I really need to explain why AT&T doesn't get it? Why this is so wrong headed and greedy and stupid? Why AT&T will make far less money on this than they would if they charged 99 cents? Why if they don't change their corporate thinking they won't survive any iPhone carrier competition? No… you get my point.

No word yet on whether AT&T will eventually ask for tiered family map pricing in addition to the $9.99 a month. You see, if you daughter goes to a particularly dangerous party, you'll have to pay extra to map that, or if you grandchild hasn't called you recently, there will be service fee for locating her and… you get my point. After all, family map "data hogs" might needlessly clog up the system by actually using it.

Thursday, February 4, 2010

Business Week Plugs AT&T Critic!

Roben Farzad gives AT&T Critic a great plug in Business Week's cover story:

While it was nice to see my name in a major business journal, the most interesting part was reading another promise from AT&T Operations President John Stankey that iPhone tethering is coming "soon."

But why not now? Well, according to Stankey, "You don't want to throw more gasoline on the fire." What? You're kidding? Roben, did he really say that?!

So let me get this straight. The "gasoline" would be extra data use by tethering on the iPhone? The "fire" would be AT&T's inability to handle all that data?

So if there's a "fire" why not stop iPhone sales? Or, why not charge extra to new customers to discourage more traffic than AT&T can handle? Or, charge a lot for tethering until AT&T's networks can handle it. No, instead, AT&T needs to "manage" it's current customers by preventing them from doing what they would like on the iPhone. So current iPhone customers get to pay $120 a month to have their uses "managed" so AT&T doesn't have to slow their market share growth. Thanks, AT&T!

Even if that was remotely defendable in terms of handling unexpected iPhone demand, it certainly doesn't fly when AT&T is planning to be the exclusive provider of service for the iPad, which will use exactly the kind of data stream that tethering would require. So AT&T prevents it's $120 a month customers from using their technology so it can sign up millions of more customers at $30 a month to do what it's old customers wanted to do.

And then, I guess, once AT&T is in control of enough market share, they'll give us the honor of charging us for tethering too. Just so long as it doesn't effect it's quarterly profits. Because despite AT&T's problems servicing it's customers, it's making tons of money on them. Money that could have been invested into fixing it's cell towers, but that might hurt short term executive bonuses. AT&T's customers can wait, or rather, they have to wait because they have no choice. AT&T has a monopoly on the iPhone in America.

Communist countries fall apart because when you have an economy that isn't based on a free market, where the government isn't answerable to the people it rules, it rots from mismanagement. The government makes decisions based on staying in power, not on what is best for the people it governs.

This is why business monopolies are generally illegal in true democracies. Because the bosses of a monopoly make decisions mainly based on keeping power, not serving their customers. This is what has happened at AT&T because they have a monopoly (of questionable legality) on a key piece of technology, the iPhone. They are making decisions not on what is best for the iPhone customers that are shelling out big bucks every month, but based on their desire to grow market share and dominate the market. So tethering doesn't fit in AT&T's plans for control of America's cell towers. So iPhone customers can't have it (but AT&T Blackberry customers can because AT&T doesn't want to lose that market share). This is wrong.

In his Business Week piece, Mr. Farzad says that the "Mackay Bells of the world" wouldn't be a problem for AT&T if it still had a strong landline business (a fading monopoly). But while I specifically may not be a problem for AT&T, others like me are. And AT&T needs to stop abusing it's monopoly power and start competing like a free market corporation. Charge for your service, charge more if it is expense or scarce, but don't exploit one set of customers to finance market share growth on another.

I started this blog just a couple months ago as an experiment. Thanks to the wonder of the internet, I'm able to broadcast it globally 24 hours for free. I've got no advertising, no name, no access to politicians. But in that short time I have a growing audience and am now quoted by big business journals. I don't expect to be able to have a large impact on AT&T's business practices, but my complaints, and my ideas, do have merit. They circulate to others. And other "Mackay Bells" who are unhappy with the way AT&T is handling it's monopoly are also writing to the world. This is the way revolutions are started. AT&T needs to consider what happens to tyranny when enough people get pissed off.

If Apple doesn't allow other carriers to service the iPhone soon, the US Government needs to step in. American's will demand it. And if Apple does allow other carriers, AT&T needs to consider the way it has mistreated it's customers, and quickly change if it wants to compete in a truly free market. I humbly suggest it starts practicing now.

Meanwhile, everyone else needs to understand why laws enforcing net neutrality are critical to our democracy.

Wednesday, February 3, 2010

What Happened to Tethering on the iPhone?

One of my biggest pet peeves against AT&T is that it needlessly prevents it's customers from being able to use it's technology to the fullest while it tries to figure out how much it can tear from their wallets. For example, tethering on the iPhone.

AT&T could offer tethering on the iPhone tomorrow. There's no legal, or technological reason not to. It just doesn't. Not only that, tethering your iPhone is so simple, AT&T has to actively force Apple to prevent people from doing it with a simple downloadable app.

Even so, it's a fairly simple hack if you're willing to jailbreak your iPhone:

Tethering with no monthly fee. But jail breaking your phone violates your service contract and can create other problems. Why should AT&T customers have to go to complicated (and possibly illegal) lengths to do something that every other iPhone carrier in the world offers?

The answer is, because AT&T hasn't figured out how much it wants charge you yet. And it wants to charge you a lot. But it thinks maybe it can't. So it would like to charge you a little, but sneak in hidden fees that charge you a lot. But maybe it can't do that.

So in the meantime, while AT&T thinks about a price structure, you're screwed. No tethering. For the rest of the world, it's 2010 and internet access is widely available. In America, thanks to AT&T, it's 1970 and you can't do anything the phone company doesn't want you to do.

How do I know AT&T's confusion on a price structure is the only reason it isn't offering tethering? Because it's a fact. Oh, sure, they might say their are legal reasons, bandwidth issues, making a deal with Apple issues, or other crap. But I'm telling you I KNOW it's because they can't figure out how much they want to charge.

Well, that and they'd rather you couldn't do it. They would rather that you have to pay separately for a separate AT&T USB dongle and pay $60 a month for that device's service. And sign a separate 2 year service contract. That's what they'd like. And that's what you have to do, if you're an AT&T customer with an iPhone and a laptop and you want to access AT&T's wireless network. At least for now.

So that's the reward for being an AT&T iPhone customer. For $120 a month in iPhone service, you get AT&T actively working behind the scenes to disable your phone so you're forced to pay an additional $60 a month (and service contract) for something you should be able to do for free.

Fine, AT&T hates you. They're greedy. Okay. Then at least be honest. Tell us, "You're never going to get tethering you bastard customers! So stop whining or we'll raise the price of texting to 50 cents!" At least then, we could move on with our lives. Stop dreaming and get used to the idea that no tethering is the price of having an iPhone in America.

But no, instead, AT&T lied. Back in November 2008, AT&T Mobility CEO Ralph De La Vega promised an audience at the Web. 2.0 Summit that tethering was coming "soon."

So Ralph promises it will be soon. But he doesn't say how much it will cost. Will it be free, like on a jailbroke phone? Nope. AT&T flacks float a price $30. They get the word out to loyal AT&T customers that it's coming soon, for a price:

But with no official date offered, AT&T PR flacks send out the message that it's only being delayed because it's complicated. More complicated than the Blackberry on which (for some reason) AT&T allows tethering.

Once again, possible price, $30 a month, limited data cap. For unlimited data, AT&T will get you a wireless PC card (with extra service contract). In case $30 for the imaginary coming service might seem a little high, AT&T flacks tried to confuse the issue. Maybe it will be even cheaper:

And no, really, it's going to come. AT&T flacks wouldn't be planting blog stories if it wasn't:

Of course, it never happened in 2009, and there is still no word of it happening in 2010.

So how much longer does AT&T intend to prevent us from using our iPhones to their fullest? Well, now the focus is on the iPad. Rumors are still floating that AT&T is going to lose exclusive rights to the iPhone, so it appears that AT&T doesn't give a shit if it's loyal iPhone customers get tethering any time soon.

Which brings us back again to why? Why not offer tethering?

Because AT&T is a dinosaur. It wants to live back in the Jurassic (1970's) period when customers had to pay whatever it wanted to charge. That time is gone, but AT&T can't stand it. So it just stands there pouting.

Everything is moving toward the idea of free or very low cost global internet access. And AT&T hates that idea. It still wants to charge for night time and weekend minutes. It still wants two year contracts to charge for NOT providing service when you want out of them. AT&T simply doesn't want to make an honest buck providing a needed service.

If AT&T wanted to charge $60 a month to tether your iPhone, there are probably a bunch of iPhone users who would simply pay it for the convenience. If it charged $30 a month, there would be many more, and probably enough more to make up for the lower price. And the fact is, at $10 a month, it would probably still make a ton of money, and keep it's iPhone customers happy. But AT&T doesn't want that. What it wants is to charge $14.95 a month, for limited data, with $29.95 for more data, with $0.49 per megabyte overages and two year service contracts with early cancellation penalties.

What AT&T loves is when you pay a fixed monthly fee and EXTRA money every now and then to make your life miserable. You know how when your phone bill is suddenly a lot higher than you thought it would be, and you freak out about if you can pay it? You know that "$240? For what? Service overage? What?" That sinking feeling in your stomach because a strange roaming fee cost $130 and that means you can't have fries with your burger for the next two months? AT&T loves that. They love those hit you when you aren't looking charges that mean you worry about paying your rent. They love you being forced to pay more than you expected.

That's what tiered pricing is all about. And AT&T hungers for tiered pricing like the Dark Lord hungered for the One Ring.

But Apple said no to tiered pricing. So AT&T has said no to tethering. So all we American iPhone users can do is wait for AT&T to finally realize it can't get what it wants and give in, or until Apple gives up and allows other carriers to offer iPhone alternatives. Or AT&T can swallow up all it's competitors and bring back 1970. Which is maybe it's long term plan.

Tuesday, February 2, 2010

iPhone AT&T's Profit Golden Goose

AT&T just added 3.1 million iPhone users and more than a third were new AT&T customers. This despite all the bad press concerning AT&T service and iPhone problems in New York.

The iPhone is responsible for huge AT&T profits. So why has AT&T been almost silent since the announcement that it would be the only carrier offering service for the new iPad? Why isn't AT&T crowing about that victory?

Is there something AT&T knows that we don't? Like Apple has another carrier in the wings?