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AT&T's mobile broadband house of cards
It has to be an unsettling week for AT&T Mobility. Looking to put a more aggressive stake in the mobile broadband market, competitor Verizon Wireless introduced a new netbook and dropped its overage fees for its $60 and $40 mobile broadband plans, from $.25 per megabit to $.05/MB and $.10/MB. And the $40 plan has seen its data usage limit increase from 50 MB to 250 MB.
In comparison, AT&T Mobility offers a 5 MB cap on its $40 plan and charges some steep overage fees: about $1/MB as an overage rate for its $40 plan and $.51/MB for its $60 plan. Analysts predict Verizon's new moves will prompt AT&T, which is by far the most aggressive at subsidizing laptops and netbooks, to change its mobile broadband pricing and overage fees.
Moreover, AT&T has found itself defending its network policy that prompted content placeshifting technology developer Sling Media to remove 3G access from the iPhone edition of its SlingPlayer Mobile video application. AT&T said the application would take up too much network capacity. SlingPlayer for iPhone enables users to stream live and recorded television content from their home entertainment system to their mobile device. In order to earn approval for the application, Sling Media was forced to disable 3G streaming capabilities, meaning iPhone users can only view content over WiFi. The same is true for Skype's iPhone application. It only works over WiFi.
According to AT&T, applications such as SlingPlayer eat up much bandwidth to operate over 3G. "Slingbox, which would use large amounts of wireless network capacity, could create congestion and potentially prevent other customers from using the network," the operator said. "Applications like this, which redirect a TV signal to a personal computer (it classifies the iPhone as a computer), are specifically prohibited under our terms of service."
Indeed, AT&T recently revamped the terms of service for its wireless data plans, stipulating that data sessions may be conducted only for Internet browsing, email and intranet access. The company noted that there are "certain uses that cause extreme network capacity issues and interference with the network and are therefore prohibited." Examples of these prohibited uses include: server devices or host computer applications, camera posts or broadcasts, peer-to-peer file sharing and devices that maintain continuous active Internet connections when a computer's connection would otherwise be idle or any "keep alive" functions.
From reading all the feedback to AT&T's move in regards to the SlingPlayer, the overwhelming consensus is: Why are customers required to shell out lots of money when they can't use all of the applications they want? Of course, it goes back to the old argument that spectrum is a finite resource. Capacity just isn't infinite. But will consumers understand?
Now, however, the stakes are higher for AT&T: Competitor Verizon has just announced some pretty attractive data terms with some cheap overage charges that might not deter end users from going over their plans. AT&T has to respond. At the same time, it has to fight a public-relations battle, play the bad guy and admit it can't support the capacity for some very popular applications. Let the mobile broadband growing pains begin.--Lynnette
Comments
Posted by Martin Suter | May 14, 2009 - 10:56am
Lynette;
Another thought provoking discussion. It seems to me that AT&T deserves kudos for several initiatives, that, unfortunately, it is not getting right now. While you (and others) applaud Verizon for dropping its overage fees on its data plans and comparing it to AT&T's "data plan", this is a disservice to AT&T, in that the iPhone data plan (the topic of the stories) offers unlimited data for $30/month, while the Verizon data plan is capped with overage fees.
Also, AT&T deserves kudos for its support of Wi-Fi, and the broad availability of broadband services, at no additional cost, to its iPhone subscribers. Is there Wi-Fi everywhere? Of course not. However, there is AT&T Wi-Fi in many locations where I eat, drink and hang out and I expect the number of locations will continue to expand.
In this regard, it seems that Verizon is trying to play catch up, with the rumoured Boingo deal. It's been pretty quiet since the WSJ reported on this, so we'll have to wait and see whether the rumours are true.
AT&T is a business like any other. Applications, like the Sling Player, will consume a disproportionate amount of wireless capacity and result in no incremental revenues to the provider. You can imagine the complaints, from other users of the network, if overall performance was compromised because of a relatively small number of Sling users.
Don't get me wrong - I love the idea of placeshifting content, but will be realistic as to when/where I will do so. Props to AT&T for preserving service quality for all subscribers, and for injecting Wi-Fi capacity into its network as broadly and quickly as possible.
It's a fine line, but I think AT&T is striving to achieve balance.
That's my .02!
Martin Suter
Posted by Chris Watson | May 14, 2009 - 11:33am
I would agree with you Martin about AT&T except that they are lying and not blocking Slingplayer from using 3G on the iPhone simply because they are concerned about it eating all their pathetic network bandwidth. Slingplayer already runs over 3G on the AT&T network on the Blackberry and I believe a couple of other phones. There is more to this blocking than they are saying. Perhaps their own streaming video app of their U-Verse service to the iPhone? Hmmmm.
Posted by Anonymous | May 14, 2009 - 11:47am
First, the iphone data plan should either be "unlimited" or not. There's no room for shades of gray. If ATT is going to put any usage restrictions either in terms of amount of bandwidth or how it is used, then they should not be allowed to market it as "unlimited."
Second, ATT's real concern is that they want customers to pay an additional fee for VOIP or video, and to purchase it from ATT. This is really a net neutrality issue more than anything else.
Posted by MO | May 14, 2009 - 2:07pm
Martin must be an AT&T employee.... That sounded more like a defense than Kudo's. The bottom line is the Iphone continues to kill At&t's already struggling data network with it's lack of compression. And to stream more video through a Slingbox will bog it down even more. And it just so has it that Verizon doesn't block slingbox and unlimited should mean unlimited. Atandt has to block these apps and will continue to block more until they can upgrade bandwidth which is way down the road for them.
Posted by Anonymous | May 14, 2009 - 6:56pm
AT&T has always oversubscribed their network then used PR and marketing to cover up their poor service.
Posted by Anonymous | May 14, 2009 - 10:13pm
at&t is blowing it again. They have people locked in to contracts for 2 years to get the phone. They should have realized this is the time to beef up the network as data use is only going to increase. Fortunately for the consumer there is a choice, and when contracts are up they are going to go to another provider. The house of cards will fall more as att loses subscribers and they have no revenue to improve their miserable network. They will then sign an exclusive agreement with something that is the "new thing" and hope to get subscribers to sign up to a multiyear deal. If this works they have bought some time, but if they make a miscalculation it could be the end for them. Marketing is good but without a quality product, or even a marginal product it won't save you.
Perhaps the marketing department should look the word "unlimited" in the dictionary. I would think if you don't allow "unlimited" data in your data plan then the consumer can opt out of the contract since att failed to live up to it's end.
Competition...let the games begin, and the consumers will win!
Posted by Anonymous | May 15, 2009 - 6:38am
Verizon will roll out LTE. Apple will need to boost flattening iPhone sales and will make iPhones available on other networks. AT&T will be forced to aggressively respond. They have already moved up the roll out date for their own 4G network as a result. Once iPhones are available on ALL networks the REAL price wars will begin. The issue in this article is a blip. The bigger picture is still to come. Oh and I forgot that to avoid becoming irrelevant the cable companies are considering putting in wi-fi hot spots throughout their respective footprints and adding access to their bundle products. Nothing ubiquitous mind you but far more than is available now. I just wish this stuff wasn't 2 and 3 years down the pipe. I'm an AT&T customer now but having their network as my only network of choice deters my wanting an iPhone just yet.
Posted by Anonymous | May 19, 2009 - 6:21pm
What if AT&T buy all rights to the iPhone? That would kill this Apple is propping up AT&T arguement. In the past, before regulations, AT&T had a tendency to absorbed companies that they were heavily vested. Why not AT&T becoming a phone vendor for itself? Before they would turn-key everything used in or on their networks. Is that a stretch or possible reality, if they don't want anyone else with the phone? It is worth it if everyone goes LTE. Think about a "phone" and a "network". hmmm
Posted by Anonymous | June 14, 2009 - 11:56am
Sad to say its all about money. AT&T just put all its eggs in the Alltel basket and can't afford to work on its network. Verizon has always been a fierce competitor and never stops working. With the economic collapse Verizon wins again.
And really, will the public ever realize that some of the stuff they are buying is still science fiction? The products are coming out before the industry can support it. I live outside the big city footprint and we don't have any of this stuff. Its all about impressing the city folks. Even with Verizon.
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