AT&T: Avast, Ye iPhone Hogs!

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AT&T — looking to ease congestion on its 3G wireless network — will introduce “incentives” in 2010 to encourage the heaviest users of the unlimited-data iPhone plan to cut down, Dow Jones reports.

About 3% of customers account for 40% of data traffic on AT&T’s wireless network, the company says, which has degraded service for customers in cities including New York and San Francisco.

So, what are these “incentives”? The telco was cagey on specifics, but AT&T Mobility chief Ralph de la Vega said a pricing scheme based on usage is likely at some point in the future, according to The Wall Street Journal’s Digits blog. He ruled out usage caps, however.

AT&T also plans to introduce a way to let customers track how much Internet data they’re sucking up. “What we actually found out is customers didn’t know how they were using data… but once you alerted them to it, they actually reduce their consumption significantly,” de la Vega said, according to Dow Jones.

The problem is that with the iPhone, AT&T introduced an all-you-can-eat data usage plan that was unprecedented in the U.S., according to telecom analyst Jeff Kagan. “AT&T and Apple are a victim of their own success,” he wrote in a research note. “If heavy users didn’t have a negative impact on average customers this would not be a problem. But AT&T cannot let the few heavy users have an impact on the rest of their customers.”

But if AT&T were to change the pricing model, that would surely infuriate more than a few iPhonistas. Recall that Time Warner Cable was raked over the coals earlier this year when it announced it would expand trials of usage-based billing to four more markets (see Time Warner Cable: Three Mistakes on Usage Pricing).

AT&T’s 3G network, groaning under the strain of iPhone traffic, may be the canary in the coal mine for the wireline broadband providers for whom such extremely high utilization doesn’t yet appear to causing similar levels of pain.

So what’s the answer? The simplistic answer: just add more capacity, guys!

The more realistic and, I think, sensible approach is to charge the heaviest subscribers more so that, say, the iPhone user who is just checking her e-mail every so often doesn’t have to foot the bill for the guy watching YouTube or whatever nonstop — see Why Monthly Broadband Usage Caps Won’t Really Work (But Usage-Based Billing Will).

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