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.

Evil Phone Empire Can't Stop Itself From Punishing Customers

Here's a nice piece on Techcrutch warning AT&T to get its hands off customer's throats:

AT&T Throttles Best Customers

It pretty much says what I said a couple weeks ago, but it says it well.  And it's worth repeating.  AT&T's hatred of its customers blinds it to the huge damage it continues to do to its reputation.  Long term, that will come back to haunt them.

AT&T Throttles Its Most Loyal Customers

AT&T's almost pathological hatred of its own customers continues.  Its desire to force customers into a pay-per-bit plans, whether they like it or not, exposes them once again very publicly as liars and incredibly short sided business people.

If you recall, the justification for tiered pricing was that "data hogs" we're ruining it for everyone by sucking up too much data, and should be forced to pay more than "ordinary" customers who were reasonable about their data use.  Of course, the whole data hog thing was a myth, but you'd think AT&T would at least try to have their policies somewhat consistent with their made up bullshit.

But this is AT&T, and consistent PR strategy isn't their strong suit.  They instituted tiered pricing, but only for new customers.  Existing customers were grandfathered in with "unlimited" plans (which really weren't unlimited, but that's another story).  This didn't make a lot of sense if there really was a data hog problem, but the truth was AT&T simply wanted to charge more, and even more importantly, create billing confusion so they could occasionally gouge customers and make it hard to compare plans between services.  (This is a company which adored hated practices like daytime/nighttime minutes and ever changing fees for long distance calling.)  So the mission was accomplished by screwing new customers into tiered pricing, without having to take a chance on angering old customers.  Hopefully, old customers would die or fall into new plans.

This of course created a huge opportunity for Sprint to steal customers away by offering unlimited plans, but apparently AT&T's leadership is willing to take that hit in order to force new customers into something they don't want.

Now would be a good time to lay low on the whole data hog thing and see how much self inflicted damage AT&T was doing to itself, but no, why not inflict more damage?   So remember those customers who have grandfathered in "unlimited" plans?  AT&T has gone to war with them.  And not just the "data hogs," basically anyone who actually uses their phones:


AT&T Throttles It's Customers

AT&T has started to throttle usage speeds on "unlimited" customers using as little as 2 Gigs of monthly data.  There are a lot of problems with this.

First, it once again exposes how big a lie the "data hog" thing was.  AT&T has always had the ability to throttle speeds, which they could have easily done on anyone using excessive data, but instead they forced non-data hogs into tiered plans.

Secondly, by targeting customers who don't use that much data, AT&T is making it clear this was always about finding ways to overcharge customers and take away transparent "one price per month" billing.

Thirdly, AT&T is attacking customers who were grandfathered in on the existing plan, that is, long term AT&T customers.  These are people who have suffered with AT&T's lousy service for some time, and didn't run to switch to Verizon or Sprint.  To attack them so soon after adopting tiered pricing is frankly, dumbfounding.  Would have been better to have just forced them to tiered plans to begin with.

AT&T's profits recently took a massive slide, mostly because of their disastrous bid for T-Mobile.  After that billion dollar mistake, a change in thinking might have been in order.  AT&T's plan for some time has been to treat customers badly, charge them too much, and use the money to buy up competing companies so they can't escape.  You'd think once the second half of that plan fell apart, and customers do have real choices for the near future, AT&T wouldn't be so quick to want to kick their long time customer base between the legs.  But I guess tiered pricing is more important than happy customers.

As for me, I switched to Sprint some time ago.  And I'm very happy with my unlimited plan.

AT&T Suffers Major Setback in Quest for World Domination

So AT&T got smacked hard on the ass this week.  The Department of Justice filed a suit to stop its merger with T-Mobile.  It's almost enough to make one believe in America again.  Of course, we can't completely assume AT&T won't eventually get away with this obviously anti-competitive absorption of one of its few true competitors.  I'm sure AT&T has lobbyists rushing into smoke filled rooms with suitcases full of cash to try to buy off politicians and regulators.  Heck, it's worked for them well in the past.

Or has it?  Let's enjoy the moment and assume that the lawsuit prevails, as it should under any logical reading of the law.   That means the merger doesn't go through, and the first problem for AT&T's greedy overreach is a huge 6 billion dollar penalty.

This is almost twice what it would have cost AT&T to simply build out its regional service, one of the supposed reasons for the ridiculous $39 billion dollar merger.  For some reason, AT&T decided that it was a great strategy to provide poor national service, with the assumption that politicians and regulators would cave in on anything they asked for in "hopes" that service would improve in the heartland.

The problem is, years of crappy AT&T service, despite tons of approved mergers, extra spectrum and even out and out payments by the US government has put to lie that idea.  No one believes AT&T anymore when it says it will improve service.

And that's why it's so dangerous that AT&T doesn't have a backup plan.  Their plan, since changing their name to AT&T, was to use cash generated by local monopolies to buy national monopolies.  To do this, they ripped off grandma's in local markets that were afraid to turn off their land lines, provided them with outrageously expensive, but crappy service, and then used the cash to, first: enrich their executives, two: buy up politicians, and three: buy up competitors.  Then repeat.

Never, during the entire process, did service improve.  And in fact, the entire shell game probably would have failed if it wasn't for the lucky accident of them having a monopoly on the biggest tech toy of the last decade, the iPhone.  Now that they've lost that, and the momentum of the inevitability of a national duopoly on cell service (between them and Verizon), where do they stand?

On very shaky ground.  Because they have become so hated even the politicians that once backed them are getting nervous about supporting them.  And the politicians that want to smack them on the asses will have proof they can do it.  Proof they can use to get money from other corporations that don't want to see  America with an expensive third world communications system.  Investors will also start to take seriously that there could be real competition in the wireless sector, and that's very bad for AT&T.

Meanwhile, I'm just waiting to activate my Sprint iPhone.


UPDATE:  Here's and interesting piece that goes into some detail about how clueless AT&T CEO Randall Stephenson is:

AT&T MISREAD JUSTICE

AT&T Accidentally Leaks Damning Letter

We all know the only reason AT&T is buying T-Mobile is to kill competition and screw over its own customers with higher prices for poor service.  But if you need more proof…

Leaked AT&T Letter Proves T-Mobile Buyout is Wrong

The big problem here is not that AT&T is evil, it's that they're stupid evil.  Amazingly, no matter how many leaked letters come out, no matter how obvious it is that they're lying, odds are the corrupt politicians in Washington will let them have their way and approve the merger.

Oh, well… hopefully the iPhone 5 will save Sprint.  Seems to be our only hope.

Great Video About AT&T Merger

Be sure to click on the link at the end of the video and join the campaign to fight the AT&T/T-Mobile merger.  It's bad for you (if you care about good phone service at a low price), and bad for America.

AT&T Buys Up Competition to Control Market

It's a depressing day for competition in the cell phone business. Evil empire AT&T is going to swallow up its only serious competitor, T-Mobile. T-Mobile has been the only big carrier lowering prices in recent years, as AT&T and Verizon have been raising them. It's unthinkable this can pass by the FCC, but unfortunately, it will. As pointed out in this article, even if AT&T isn't allowed to kill its lower priced competitor, this move will effectively hobble T-Mobile for years.


AT&T to Buy T-Mobile