Cable Hearts iPhone's Usage Caps


Suddenly, AT&T and the iPhone have presented several new compelling reasons to sign up for cable’s broadband service.

The new iPhone 4, introduced yesterday to the predictable media crush, provides 10 hours of battery life for playing video. In addition, among other features, the latest model includes FaceTime, a video-calling app that lets you see who you’re talking to “anywhere there is Wi-Fi.”

And there’s the rub. Now that AT&T has eliminated its all-you-can-eat plan for smartphones, you will blow through the maximum 3G usage for the entry-level 200 MB plan if you watched just 4 minutes of streaming video per day (see AT&T Bites the Bit-Metering Bullet). That would include commercials.

Even AT&T’s more generous DataPro 2-GB plan would allow just 35 minutes per day of streaming video (assuming you used your iPhone for nothing else), according to the carrier’s online data calculator.

And the new AT&T caps, which went into effect for new customers June 7, arrive as one of the bandwidth-hungriest iPhone apps ever is set to debut. At the iPhone 4 launch, Netflix announced it will release an iPhone app this summer — something we’d heard rumblings about for months — after the video-rental service previously introduced an app for the iPad.

The upshot: iPhone users now have an economic incentive to connect over Wi-Fi networks as much as possible. Especially if they’re streaming Netflix movies or TV shows.

And that’s good news for cable operators, which provide typically the fastest broadband in a given market (versus DSL) and offer either unlimited usage or far higher caps (e.g., Comcast’s 250-GB monthly ceiling).

For now, AT&Ts metered-billing move gives a competitive advantage to providers that still offer unlimited-usage plans. And in the long run, it greases the skids for MSOs to institute consumption-based billing themselves at some point, as the Wall Street Journal pointed out in a story Monday quoting Time Warner Cable president and CEO Glenn Britt.

AT&T’s announcement “is good for this set of industries. It’s going to get the industry better aligned with natural consumer behavior than it has been,” Britt said at the Sanford Bernstein Strategic Decisions Conference last Friday.

But as Britt well knows, having been burned in TWC’s attempts to test out this concept, the success or failure of the idea is all about the execution (see Time Warner Cable: Three Mistakes on Usage Pricing).