Monday, March 5, 2012

How About "RollOver Data" AT&T and Verizon!?

I recently railed against AT&T's decision to abandon all  "unlimited data" plans even for its most loyal customers who joined the company at the iPhone's inception. During that initial launch, AT&T couldn't get enough new customers willing to drink their Kool Aid and abandon their current carrier in favor of the holy duality of Apple's newest product coupled with AT&T's (exclusive) rights and promise of unlimited data plans. Myself and tens of millions of others, defected from their current carriers and showed with their pocketbooks a willingness to pay a higher fixed monthly usage fee in exchange for use of an iPhone on AT&T's marginal data network.

AT&T again capitalized on its exclusivity when the iPad was first introduced about three years ago. In many instances, the same early adopters of the iPhone, accepted their fate and professed allegiance once again to AT&T's then even more stressed and less reliable network. "Unlimited data" and exclusivity were once again the compelling forces causing an additional $30/month access charge to transfer from my bank account to AT&T. (This time, AT&T made the contract "month to month" (I am certain they were coerced into this arrangement), but the promise of unlimited data and more reliable connectivity, remained the same.)

Fast forward to last week when it was made official, No unlimited data plans of any kind. Any  usage over 3 Gigabytes per billing period will no longer be throttled, the customer will be subject to surcharge fees. (For additional details, I refer you to my earlier  post on the subject.)  Verizon and AT&T have aggressively moved away from unlimited data consumption over the past couple of years. It has long been true that any lapse in billing, for instance if you wished to forgo a month of 3G cellular service on your iPad because your travel plans would keep you accessable via wi-fi, a "perfectly legal" action given the month to month nature of the agreement, would also abdicate your "grandfathered" unlimited data plan status. For myself, and I am sure countless others, this "threat" was sufficient to keep me paying my $30/month tithe to almighty AT&T despite limited, or even no, use of their cellular services during the billing cycle.

As I reflect on this fact, I am struck by the fact that the majority of months I have been paying for "unlimited" data for every iPhone and iPad product I have purchased to date, in the VAST MAJORITY of billing periods I haven't approached  the current 3 Gigabyte/month/device cap. I suspect (and if AT&T's billing system made it easier, I would go back and verify this premise)  my usage falls squarely in and around the mid-point, fiftieth percentile, of all iDevice users (and perhaps lower). And yet I have paid for multiple devices (typically two iPhones and one iPad), unlimited data plans, year after year.

In a halfhearted effort to appease consumers who didn't use their (increasingly irrelevent) bucket of voice minutes, AT&T marketed a rollover plan several years ago. Over time, they have made this program less and less generous, limiting the "life" of your old minutes before they roll over and die (being permanently removed from your pool of voice time), but still, I thought this was a good marketing ploy. The tactic certainly appeased some customers who knew they were being cajoled into higher voice minute bundles because the threat of an overage, particularly by some family member (I had a teenager in the mix for many years whose voice and texting patterns could swing with wild abandon from month to month) was too much to bear. In my case, at times voice calling activity dropped to near zero, only to skyrocket with the latest chatter or boyfriend to what seemed stratispheric levels of communication, the next month. (Of course, Dad always discovers these facts after the fact as the AT&T bill drops in the inbox.) So rollover minutes provided some marginal level of "protection" and made the loss of unused minutes less painful during average billing cycles.

So AT&T, if you insist on capping my data plan and charging confiscatory rates for any overage, where is my rollover data? I want a CREDIT for all of the months I have purchased unlimited plans on multiple iDevices on your typically substandard cellular network and not approached the cap. Come up with some algorithm skewing the dollars in your favor while nevertheless making your users  "feel better." Perhaps credit our data stream for all megabytes under the fiftieth percentile in a billing period instead of crediting 100% for all usage under your 3 Gigabyte cap (which would be most fair). However you do it, you should make it retroactive for those who have been grandfathered (at least for some timeframe). 

Why would AT&T and yes, Verizon, be interested in this idea? In a race for profits, you are unleashing a plan which penalizes your best, most loyal, customers. There is an upcoming "season" of new product introductions including a new iPad, iPhone, and (finally) some really interesting Android tablets. This time period will provide ample opportunity for customers to reflect on what company they want to "marry" for the next contract cycle.

Hardware based exclusivity is becoming a thing of the past. So too, Sprint,  like Avis, is willing to "try harder" to get incremental subscribers. In short, your churn rate is about to spike. If you don't appease your best customers, watch them shop based on other factors and whatever profits you may realize by billing for excessive data usage, is going to be more than offset by losing your best customers (and the associated expense of trying to win new customers in an increasingly competitive environment). 

Gimmickry abounds and it isn't lost on small business owners and individual consumers. We see  package specials welcoming new customers to the fold. Communication giants are willing to sacrifice margins, not to mention long term users' (notice how these companies call their customers "users...?") unhappiness. Rewarding the next lemming, rather than loyalty, is now an industry norm.

And herein lies the most pressing fear for consumers. This spiral of caps and billing has only begun. Today the cap is 3 Gigabytes. Tomorrow, when AT&T, Verizon, and others get scared that their profit margin isn't sufficient to continue paying out mind boggling annual bonuses to top management and healthy dividend rates to investors, the "easy" solution is to drop the cap and increase the billing rates for overage. This is a battle of the Top XX% of users. The bandwidth cap will continue to lower, striking a balance between the companys'  "optimized profitbility" while impacting some ever larger group of "heavy users." Today the Top 5%, tomorrow the top 15% of a lower cap!

AT&T argues their throttling only impacted the Top 5% of users in any given geographic region (which was impossible to predict because usage varies so widely). The Top 5% in middle-Tennessee would be impacted by a usage number very different from the Top 5% in the San Francisco market where "average" usage could be two or three times that of Nashville. For some, the nebulous nature of AT&T's penalization makes last week's announcement of a "cap for all at 3 Gigabytes" seem somehow fairer. It isn't, but it is easier to understand that is for sure.

This discussion is going to continue. It is inevitable with the promulgation of data hungry services such as Netflix and iCloud Match, better hardware pushing more data bytes (especially video) to achieve higher resolution, and an increasingly mobile society tethered more to smart devices than office cubicles and home desks, coupled with macro issues spearheaded by a federal government which promotes a less than optimal oligarchy of commercial data providers and limited spectrum sales.  The USA system also promotes limited mobility between providers,  this is both a financial (contracts with subsidized hardware) issue and an infrastructure problem (with non-compatible cellular services criss crossing our nation).  These issues aren't going to "just impact" the Top 5% of all users for long!

If you are a small business owner, or simply an individual consumer, and aren't worried yet, you should be. You may say, well wi-fi is everywhere and I will just rely on that for my major digital consumption. (For a discussion on how to do just this with video files, read this post.) It is only a matter of time until meaningful caps are imposed on data usage by major carriers. Comcast already has a 200 Gigabyte cap on many accounts. This doesn't get much discussion because it currently only impacts the much maligned Top 1% of users, but the precedent is set. There may well come a day when all data is billed out just like your electricity charges, byte by byte. You will be charged for the first email of the month and the last movie you download before the billing cycle resets..... When and if this happens, there will finally be a real hue and cry. There will be a discussion in this country about the free flow of data (and tangentially, information). Full metering of data usage would have such a profoundly chilling effect on our economy and country, it is hard for me to contemplate. The ramifications would be profound. I dread government's involvement as well. In many ways I think these issues have the best chance of being addressed in a free marketplace. Increased, unfettered, competition on cellular and wired networks would allow both dollars and data to flow most efficiently. Sadly, our country seems content to allow more government intrusion, not less. Interesting times. Meanwhile AT&T, I want my rollover data !!

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