AT&T leads the way to a future that won't be half of what it could be - we all know the carriers are having a hard time provisioning enough data capacity to meet the demand, but more scarcity isn't the answer. Priority-based pricing, though, is.
AT&T is at least partially promoting its new wireless-data pricing plan as a price reduction for users, and that’s undoubtedly true in at least some cases. The only problem, though, is the psychological effect of not knowing when one might actually be bumping up against the new synthetic, arbitrary limit (200 MB or 2 GB, depending upon option) and having to pay an overage fee. My key point here: if users can’t control the content they’re downloading, and they absolutely cannot, this approach is little more than yet another attempt by a carrier to avoid doing what’s best for the customer, and, in fact, the economy overall. Let’s revisit the politics and economics of scarcity and marvel and how, once again, our suppliers disappoint us and damage the overall economy.
This not-unexpected announcement of the end flat-rate data pricing seems to have hit a nerve – I’ve been quite surprised at the number of calls and messages I’ve received from people who want to discuss the meaning in this. That meaning is really quite simple, and it’s rooted in economics 101 – when supply is limited and demand increases, prices similarly increase. No magic here. But once again we have a system-wide failure – from the regulators to the carriers – that once again seems to encourage scarcity. This isn’t good. Such a strategy takes the pressure off of the carriers to deploy more capacity, for the regulators to make more capacity available, and for the development of new advances in technology like cognitive radio (more on that later), all of which are much closer to solutions to the bandwidth challenge than the soggy bandaid of capacity-based pricing.
Usage-based pricing, as I alluded above, also isn’t fair. Users rarely if ever have control over how much data they receive. I’ve contended for some time that mobile users need access to all of the Web, and Web pages, to say nothing of such capabilities as mobile video, can be quite bandwidth-intensive indeed. Even if we produce scaled-down (for a mobile device) Web pages via .mobi or mobile.whatever.com or the app mechanism popularized by Apple, there’s still little that a user can do regarding the consumption of bandwidth – other than to worry that simply enjoying access to information while mobile now has an indeterminate cost. And what about video? Ditto. As users, we have no control over compression and other elements affecting quality. Why do we then, have to pay (OK, potentially) (a lot) more for factors affecting price but beyond our control? This situation is just like the pre-deregulation days of ordinary voice telephony, when we’d watch the time waiting for five o’clock rather than focus on getting business done. Flat-rate pricing is essential, then, I would argue, to the productivity that derives from access to telecommunications of any form.
Think of all that won’t happen now. Think of the little voice in the back of user’s heads, asking questions with no answers. Think of the anger and frustration at unexpectedly high bills (we’ve seen this WRT texting and more already). Think of lost productivity, lost business, and lost economic growth. Yes, it’s that serious. I am not overstating this issue in the least.
What to do, then? The answer, as I’ve noted before, is to meter priority, not volume. Paying more for a “platinum” plan gets your traffic to the head of the queue more often. If the network is loaded, you’ll likely still get decent service. Those on the “bronze” plans will have some kind of fair access, but will occasionally have to wait – although, at 2:00 in the morning, away from the singles bars, anyway, they should see platinum-like throughput and responsiveness. Some of those users will regardless get frustrated and upgrade – and thus provide more revenue for the carriers. And the carriers will still have the incentive to upgrade their capacity because, after all, they live in a competitive, market-based environment. Crappy service doesn’t cut it, even for AT&T. The iPhone exclusive is off, or so I understand, sometime in 2012. Verizon will then get to show if their network has the chops.
And, no matter what, even with the notable wrath of the demo gods visited upon Steve Jobs yesterday, yes, we’ll still be dependent upon Wi-Fi no matter what. More on that shortly, but all wide-area carriers will need a Wi-Fi offering to offload their overloads as they occur.
So while I completely understand that AT&T needs to make a profit to continue to operate and further build out their network, the short-term gains they’ll see as a result of this policy change are bad for our society and our nation, and, of course, us, as individuals, overall. Once again, the customer loses. What a mess.
