By Matt Burns
Once upon a time wireless carriers offered unlimited data plans. Consumers signed the contracts, got their iPhone or Droids and went on to enjoy the smartphone revolution. Along the way streaming video and music hit it big and social media exploded into new demographics. All these things require data, but no worries — the carriers said we had unlimited data. Consume all you want, they said.
But then a glowing lightbulb appeared above some carrier’s executive’s head, suddenly realizing data is an untapped source of massive revenue. Unlimited plans were replaced by tiered data and fear-mongering marketing campaigns were launched to scare consumers into buying more data than they need. Carriers allowed current subscribers to keep their unlimited plans but they aren’t safe forever. Now AT&T (NYSE:T) is aggressively throttling users in an attempt to purge users from the open data bar.
The sad thing? AT&T is targeting their best customers with these attacks, many of which have plenty of better options now.
Throttling isn’t new. Verizon (NYSE:VZ) and AT&T started the practice in mid-2011 in a move they claimed would relieve network congestion. They said a tiny percentage of users were taking advantage of the unlimited plans, consuming dramatically more data than they should. Then yesterday, an AT&T big wig blogged about the explosive mobile data growth the company saw over the last five years.
That’s always the excuse for data throttling. It’s the same one used by broadband providers for capping plans. But unlike landline ISPs, consumers signed a contact with wireless carriers. This contact has a significant early termination fee to protect the carrier against a loss if the consumer decides to leave — a fee which AT&T doubled last week. But where’s the ETF when the carrier wrongs the consumer?
Occasionally carriers bend contracts just enough to open a hole large enough to allow subscribers to leave without penalty. But escaping is not something easily accomplished. The subscriber often has to say exactly the right thing to a specific customer support agent. It’s nutty.
AT&T is reportedly ramping up its attacks on subs with unlimited plans, sending text messages warning of excessive data use (when it’s not excessive) and stating that their data pipe will be partly closed. It used to be that a crazy amount of data was used in order to be throttled. Now the threshold is much lower. AT&T is warning consumers sooner, sometimes when a subscriber hits around 1.5GB of data. But this isn’t about network congestion, this is about selling data plans.
You see, AT&T just rolled out new data packages. $30 now gets you 3GB of data, $50 gets you 5GB — it’s easy to remember and sell. But if AT&T’s network is so congested, why are they selling larger buckets of data?
They’re trying to get people off of the unlimited plans.
The sad part, which bothers me greatly, is that AT&T is attacking their better customers. Unlimited plans went away in mid-2011 so these subs have been with AT&T for some time. Owners of the iPhone 4 are likely on unlimited plans. With the iPhone 5 launching this summer, they have the option of going elsewhere. AT&T clearly forgot the old sales adage of “it’s more expensive to get a new customer than keep an existing one.”
AT&T, leave your subs alone. Stop f*ing with them. They signed a two-year agreement with you, held up their end of the bargain with the expectation that you would do the same. Clearly your network is fine. You’re selling large data packages so it must be up to some (sub-par) standard.
But even if my plea goes unheard (which it probably will), hopefully the free market will work properly and your anti-consumer practices will result in a loss of subscribers.