Rohit Mishra

Thoughts which don't fit in 140 characters.

AT&T's New Data Plans Will Choke Mobile Innovation

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[caption id=“attachment_58” align=“aligncenter” width=“500” caption=“Queue of IPhone customers at AT&T store”]Queue of IPhone customers at AT&T store[/caption]

AT&T – the only American network to offer the IPhone has announced new data plans) on June 2.  The new plans replace the current unlimited data plan for $30/month. In its place, AT&T now offers 2 separate plans with usage limits of 200 MB and 2 GB respectively. It is true that the flat unlimited plan congested the AT&T network, and earned a lot of negative publicity for the company, especially at technology gatherings like SXSW. But for all the flak AT&T has received, it can claim to be the carrier that ushered in the mobile revolution with IPhone. The breakneck speed of innovation that mobiles have witnessed since the launch of IPhone in June 2008 has few parallels in other sectors. Mobiles have had  a complete transformation of role from being a voice-centric device to a data-centric device.  After reaping the benefits of this app economy, where the brilliance of IPhone prevented people from migrating to other networks, AT&T has made a huge barrier to innovation by having this usage limit. As someone, who has usage limits all the time – even on his laptop [ I get 8 GB usage at 512 kbps for $18/month] , I know that once you have a background process running figuring how much bandwidth you are consuming, you can never use net freely.

AT&T has 2 data plans now. The first called DataPlus – 200 MB for $15 with $15 for every additional 200 MB. AT&T says 98% of users use less than 2 GB of data per month and 65% users use less than 2 GB/month. With Location Based services, Full Navigation with color maps, video calling, mobile video etc set to have a huge increase in usage, I don’t know how AT&T convinced itself that 200 MB is enough for anyone. You can probably have text emails and a twitter client run in 200 MB, that too without images. Don’t even dare to click on all those links in tweets. The DataPlus plan works out at $75/GB – Rs. 3750/GB. Someone needs to charge AT&T with misusing their market share.

The 2nd plan is called DataPro 2 GB for $ 25 with $10 for every additional GB. This is AT&T’s flagship plan. The per GB cost of DataPro is $12.50 – Rs 625/GB  - 6x cheaper than DataPlus. AT&T’s business sense is clear. It wants majority of its users to opt for DataPro – even those whose usage won’t have gone beyond 500 MB today. I am not in favor of companies having unprofitable business models, but by setting the threshold usage at 2 GB/month, the entire mobile revolution faces a big stagnation. These estimates have been seen earlier too, But, they all assume a high degree of Wifi usage. Does AT&T offer free Wifi or will wifi usage be billed together with 3G usage. Wifi cannot be a permanent solution for lack of 3G infrastructure. By heavily depending on fixed Wifi infrastructure, AT&T is taking away from ‘mobility’ of a mobile device.

What have been the most talked about mobile apps today? Google Maps, Skype, YouTube, Layar, Spotify. Directly streaming content to a mobile device was one of the biggest advances cited in the newest flavor of Android 2.2 Froyo. With data usage being capped, can mobile streaming services work? You will probably wait to get to your office/home and free Wifi before you can use these apps. But people need navigation on the road, not in their homes. We want to listen to music while traveling, not only when we have wifi around. AT&T says that they know the physics that wireline data will be cheaper than wireless. Agreed, but I hope AT&T has not forgotten that wireless is the future. With their profits flush with all the expensive contracts that these ‘data’ – based devices like IPhone get them, they should work on making wireless data cheaper – not give diktats on how much usage is bound to be enough for everyone.

I will put an anecdote here. I have a slow EDGE data connection at my university. 3G is not available in India beyond few cities, and spectrum bidding has just been concluded. My university has a private paid limited usage wifi service :( who have ‘blocked’ mobile devices from accessing the network. It is insane, I know. When I see a link on Gravity, the twitter client on my Nokia 5800, I use a service called ReadItLater which is nicely integrated with Gravity and then wait to return to my laptop where I can see these links. As much as I will like to have a podcast of TED videos or MIT OpenCourseWare on my phone, I can’t have it. My problems are acute because my laptop data usage is also capped at 8 GB/month . People in USA won’t have the same problem with their home broadband, but I fear that their experience will be pretty similar on mobile devices.

AT&T also has a $20 convenience charge for tethering [for the unstarted, its using cellphone to get net on your laptop] . In conversation with GigaOm about the new plans, AT&T’s Senior VP of data products Mark Collins said:

GigaOM: What about the $20 tethering fee? It looks like a convenience charge.

Collins: That capability is enabling something you can’t do today. You can use one device and get multiple connections so it’s more useful to you. You’re going to use more data so the price is based on the value that will be delivered.

This is the prefect art of speaking with finesse without any meaning. I hope Collins read Seth Godin’s post yesterday . Because he meant nothing. Use more data – how? you have it capped at 2 GB!!

With LTE and more apps, the demand for mobile data will grow exponentially. Sadly, these new tiers will pull consumers in opposing directions. – Something which weak mobile batteries have done till now. It will have been better if the data usage base would have been set at 5 GB instead of 2 GB.

Sitting here in India, I am worried about AT&T’s move because USA has been the biggest market for mobile apps. I don’t want to see it stagnating. For the amount of anger this move generated in USA, see this MobileCrunch post.

Photo from Jennifer Woodard on Flickr

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