Friday, March 2, 2012

AT&T's New PR Disaster

AT&T CEO Randall "If I'm Talking I'm Lying" Stephenson got a $2 million dollar pay cut because of his massive overreach in trying to merge with T-Mobile.  But don't worry about him, he's still pocketing 22 million in compensation for losing AT&T four billion in the failed deal.

Make no mistake, the T-Mobile deal fell apart directly because of AT&T's years of horrible iPhone service and customer gouging.  This is a company no one wanted in charge of it's cell phone future.  The idea of giving it more power and less competition was unpalatable even to the politicians AT&T has been courting with lobbying money for years.

And guess what?  AT&T has learned nothing from this disaster.  They're rushing head long into another PR storm by their ridiculous policy of throttling long term customers who use as little as 2G's of data.  Recently, a small claims court ruled in favor of an abused AT&T iPhone user.

iPhone User Slams Down AT&T

This is exactly the kind of "little guy wins against the big evil corporation" story that spreads like wildfire on the internet.  Mix that in with iPhone, and it's going to be on the front page of the Huffington post over and over again.  If anyone in charge had any sense, AT&T would quickly apologize and reverse this policy.  My guess is they will, but only after more damage has been done.

An interesting fact came out in in the court case.  It's that over 17 million AT&T customers, almost half their smart phone users, still have "unlimited" data plans.  This creates a lot of problems for AT&T, which is determined to force customers into a "pay per bit" model so they can gouge them at will in the future.  As evil (and theoretically profitable) as their long term plans are, their current effort to implement it is bumblingly stupid and short sighted and more likely to hurt, than help their "pay per bit" strategy.

Aside from the obvious, you don't treat your best customers like shit, there are several huge problems with AT&T's current throttling effort:

First, it's horrible PR for AT&T.  This is THE AT&T story right now.  AT&T spends millions trying to promote their company, their products, their services.  They spend millions lobbying politicians for favorable government actions.  They have hundreds of sock puppets running around on line trying to spread misinformation about what a great company it is.  Yet this story is front and center over everything else AT&T is doing.   It makes the company look really, really bad.  While AT&T may correctly guess that a lot of it's current customers are too lazy or poor to make a change, anyone considering a new iPhone purchase will have to think twice about going with a company that "throttles" it's customers.  And losing even a small percentage of customers who get pissed off by the policy seems really stupid given that competition for the iPhone is heating up.

Secondly, AT&T's entire justification for "pay per bit" pricing (since it can't tell the truth and say it's all about ripping off customers) is that there is a looming shortage of data capacity.  This fake problem doesn't hold up to much scrutiny.  But what little logic it has, completely falls apart if AT&T is throttling "unlimited" customers at 2 gigs to force them into a pay per bit plan that will give them 3 gigs.  Also, the fact that iPhone customers using 2gigs are in the top five percent of unlimited data users, means that most people (95%) are barely using any data.  Clearly, there is no looming data shortage if 95% of customers use less than 2gigs.  It's becomes even more obvious AT&T simply wants customers to move into plans that will allow AT&T to enact rate increases more easily and less transparently.

Some PR dorks at AT&T, in charge of convincing people there is a fake data shortage, are probably arguing the opposite, that this bad press is really kind of good, because it gets people scared about a data shortage.  This assumes people really aren't smart enough to do some simple math.  But even if they aren't, news is going to come out pretty soon that Sprint is signing up tons of iPhone users and growing market share in the smartphone business by being the only company offering unlimited service.  That news will be contrasted to AT&T's throttling of it's long term iPhone users.  Why is AT&T worried about a data shortage if Sprint isn't?  Doesn't make AT&T look like a company you want to sign up to a two year plan for.

Years from now, when AT&T loses even more legislative and business battles at the hands of it's incompetent leadership, people might not even remember the throttling story.  But make no mistake, AT&T's continued mismanagement of customer relations will long term repercussions.

Imagine, for a second, that instead of "throttling" long term customers who actually use their iPhones, AT&T offered special upgrades and discounts to encourage customers to move into "pay per bit."  Or simply was patient and waited for natural attrition.  Or better yet, abandoned the entire evil scheme to market a fake data crisis to implement a policy customers hate.

Or, more simply, imagine it had a different CEO.

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