AT&T Bites the Bit-Metering Bullet

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Get your bit-counters ready.

AT&T has eliminated the flat-rate, all-you-can-eat data plan it previously required for customers with iPhones and other smartphones, although the carrier says current users are not required to switch to the new plans (see AT&T To Establish Usage-Based Pricing For Smartphone Users).

This comes the same day Cisco released its third annual Visual Networking Index Forecast, predicting a fourfold increase in IP traffic globally from 2009-2014 (see Video To Consume Most Internet Bandwidth In 2010: Study).

As Internet-bandwidth usage continues to climb, per-bit pricing schemes will find their place among wireline providers, too, notwithstanding Time Warner Cable’s ill-fated experience on this front last year — see Time Warner Cable: Three Mistakes on Usage Pricing, AT&T: Avast, Ye iPhone Hogs! and Why Monthly Broadband Usage Caps Won’t Really Work (But Usage-Based Billing Will).

It’s already common in the Great White North: Rogers Communications and Cogeco employ usage caps and consumption-based billing (see Translation Please: ‘AUB’ Lessons From Canada). Comcast and Cox, meanwhile, cap usage for wireline users (Comcast’s max is 250 Gigabytes; Cox’s are variable with a 200-GB limit for the Preferred tier) but don’t charge overage fees.

The issue is that as demand outstrips capacity, nobody who is in the business of providing Internet access believes that flat-rate, all-you-can-download pricing models are sustainable (see Verizon CTO: Metered Bandwidth Is Inevitable).

It will take a few more years until consumption-based pricing for broadband is widely employed in the U.S., and the key will be to set the caps high and provide clear usage-meters and communication to customers. After all, most people don’t even know what the speed of their broadband service is supposed to be, much less what their usage is (see Most Americans OK With Broadband Speed: FCC Survey).

Until then, providers that continue to offer unlimited, flat-rate pricing may have a competitive marketing edge: Note that Verizon Wireless currently offers an unlimited-data 3G plan for $29.99 per month.

However, Verizon Wireless, too, sees a move to usage-based pricing at some point in the future.

With the advent of 4G wireless, “the model to me going forward is I expect that people will have realistically four or five or six devices that they have to connect to the network, and it may be as many as 20,” said Verizon Wireless CEO Lowell McAdam at the Barclays Capital Global Communications, Media & Technology Conference last week. “And so I think you’re much more into the mode of instead of a device and a price plan, you are into, ‘Let me buy a bucket of megabytes and I will use them any way I want.’”

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