Opinion

Felix Salmon

Some answers from AT&T on data pricing

By Felix Salmon
June 6, 2010

I sent AT&T spokesman Mark Siegel some questions this morning:

1. Will you have “rollover megabytes”? If not, why not?

2. Why do the plans have to be chosen ex ante, rather than ex post? Wouldn’t the plans be much more convenient for consumers if they just automatically paid for the Data Pro plan when they went over 200 MB, but paid only for Data Plus if they consumed less than 200 MB?

3. How exactly does data plan switching work? If I’ve consumed 150 MB in a month and switch from Plus to Pro for the rest of the month, do I pay any more than if I had been on Pro all along? What if I’ve consumed 250 MB in that month before making the switch? Do I pay $30 or $25? And what if I switch down from Pro to Plus — is the amount of time I spent on the Pro plan pro-rated, or do I still get the whole month for $15?

4. Here’s a comment I received on my blog:

It’s a patently cyncially priced plan. It’s extremely easy to exceed 200MB if you use your phone to surf the web and use Google Maps on a fairly regular basis, but you’re unlikely to exceed 500MB unless you do data intensive stuff like downloading music and streaming video.

You say you’re all about consumer choice, but it does seem that your choices are clear ones only for (a) Blackberry users who mainly just use email; and (b) heavy users who stream music/video, or who have a 3G iPad. The rest of us — which I think would include most people with an iPhone — are in that unhappy cusp zone around 200 MB where it’s very easy to make the wrong choice. Are these plans specifically designed to make us unhappy?

5. An AT&T representative said here that iPad 3G owners who turn off their $30 unlimited plan will be able to turn it back on again. Is that true? And is it fair for people to characterize the widespread advertising of the unlimited iPad plan as a bait-and-switch, given that it lasted less than 40 days?

Siegel replied:

We don’t have rollover megabytes.

The iPad plans are all prepaid and no-commitment. You pick the plan that works for you. Want to drop it? No problem. Want to pick it up at some other time? Also no problem.

We think that approach is easy and flexible and puts the customer in charge of what they want to do.

On switching plans: Customers can switch between the two new plans easily, even in the middle of the month. They can do so themselves on the Web or by contacting us. In either case, they choose whether to make the jump from DataPlus to DataPro that day, for the next cycle, or backdate to the beginning of the cycle to avoid overage charges. And remember, we give free text message (and email if we have the address) alerts at three usage levels, in addition to all of the other ways customers can monitor usage.

If you buy the iPad before June 7 and want to use the unlimited plan, you can.

So, that’s one question answered, at least: it seems that you can backdate your data plan to the beginning of your billing cycle if you’re switching up from Plus to Pro. (It’s not clear if you can backdate a downswitch from Pro to Plus.)

It’s also pretty clear that if you turn off your unlimited data plan on the iPad, you won’t be able to turn it back on again. But we knew that already, didn’t we.

As for the lack of rollover megabytes, I think that underlines that the underlying business plan here is cynical/evil. AT&T loves to talk about how many people use less than 200 MB of data per month on average — and if they really cared about serving those people, then they would be happy to let them roll over their unused megabytes. But as it is, someone like me who uses less than 200 MB of data per month on average is still probably going to end up subscribing to the Data Pro plan. Which is great for AT&T — an extra $10 a month for them — but is hardly the customer service that Siegel’s making it out to be.

Comments
10 comments so far | RSS Comments RSS

glad I was right about #3. Not just because I like being right :) but because being able to switch plans retroactively mid-month combined with warning notifications is clearly preferable to the alternative of…not being able to do this.

I’m still with you that it should just be automatic, and the other stuff isn’t great, but this makes it somewhat easier to monitor at the very least.

My personal plan is (if I don’t just stick with the grandfathered unlimited plan I’ve got now) is to get the $15/month plan because I’m a pretty low data user (according to my records, I haven’t gone over 200MBs in the last year), but if I get an alert that I’m approaching my limit on anything other than the last day of my billing cycle, I’ll just retroactively switch for the month, and then immediately set up the following month for the lower plan again.

Posted by very-simple | Report as abusive
 

Felix’s message is “I want to pay less”, but the message is disguised in the rhetoric of “lack of service”.

I’m not sure if this is intentional or just lack of understanding. The price is what you pay, the service is what you get. You may argue that the service is low given a certain price, or that with a given level of service the price is too high. An argument that setting a high price is bad service is outside any logic.

And since this is a debate over USD5 pr month: We are very close to a subject where “rational ignorance” is the rational way for most of the readers of this blog.

Posted by Gaute | Report as abusive
 

I have a question. How exactly is this top 1% of users sucking up so much data? (one commenter suggested that these users consume 1 terabyte/month.) I use my phone A LOT and I think I maxed out one month at 700 MB.

Is this jail-broken iPhones that have been tethered?

Posted by jon_bonanno | Report as abusive
 

Felix,

I appreciate your attempt to do something good. And I suppose there is that one in a billion chance of success.

But, in today.s world, business make money from ignorant customers. That is not going to change.

The banks earn huge profits from fees. Late payments, bounced checks, $35 fees for honoring a debit card that goes 10 cents over the limit etc. They claim these fees benefit the customer.

AT&T wants profits. They do not want happy customers. That’s the business style that works today.

Integrity? Honesty? Fair play? Pride in running a business or offering a service? That’s history.

Posted by MarkWolfinger | Report as abusive
 

@Gaute: You seem to be missing the point. I don’t think anyone is complaining about the price. After all, both new plans are still cheaper than the current $30 data plan.

The problem is the business model. These plans are clearly set up to profit on one thing and one thing alone: the customer making mistakes. There’s no other conclusion that can be made. There’s no other reason to charge a user $30 after using 201 MB of data and ABSOLUTELY no other reason to charge the user $45 at 401 MB when 2GB can be had for $25. Why would anybody choose these scenarios on purpose? NO ONE would unless they did it on accident.

It almost seems like AT&T would look LESS evil if they did not allow the user to change back and forth between plans so easily because as it is, they demonstrate that there is no cost to tracking complex plan scenarios. So it stands to reason that ex post pricing would cost them nothing as well.

To me, this is the hallmark of “evil” business. When your business model is to profit off of the customer making a mistake (hidden fees, major complexity, legalese, etc.) vs offering them a superior product, you are running an evil business.

Posted by spectre855 | Report as abusive
 

Maybe it’s just me, but I don’t look at 250MB or even 500MB as a lot of data in a month or even a bad day, but however low the break point may be, AT&T is already scraping the bottom of the barrel in terms of strenuous overbilling and pathetically mealy-mouthed excuses.

http://www.ucan.org/blog/telecommunicati ons/wireless/att_needs_help_its_customer _service_legal_threats_and_new_data_plan s

Someday in the near future, Americans will look back and laugh about how AT&T persisted in trying to gouge customers over (what will by then be widely perceived as) relatively trivial chunks of data, and how arrogance and corporate greed led to AT&T’s ultimate demise. That’ll be something we can all celebrate.

Posted by HBC | Report as abusive
 

@spectre855: You have a valid point, but I never thought of marketing as a part of the service. I never expected a seller of services to help me lower his bottom line. And I still find it a bit hard to use “bad service” as a synonym for “evil marketing”, which it definitely seems to be. Maybe Felix actually is smart by using the “bad service” rhetoric, kind of calling the bluff of the seller in pretending to take care of the buyer?

Posted by Gaute | Report as abusive
 

It’s bad service if the seller of said service is making it intentionally difficult to ascertain what is the correct level of service the buyer actually requires, and when wrong moves can result in excessive charges for identical service. The plan seems to be designed for no purpose other than to (sometimes) screw buyers over when they use 401MB of bandwidth. Otherwise, everyone should just be signed up for $25 when they go over 200MB a month and be done with it.

Posted by MarshalN | Report as abusive
 

It’s a very bad service, coincidentally one with a stranglehold over large tracts of the communications market. While AT&T’s bottom line is skewed in its favor by immense public subsidy, nothing the cartel does is in the public interest – its every stratagem calibrated toward Empire.

http://www.niemanwatchdog.org/index.cfm? fuseaction=ask_this.view&askthisid=00443

AT&T must be brought under control. Better yet, broken up once and for all.

Posted by HBC | Report as abusive
 

I definitely see the 200MB/mo plan as a marketing ploy to prey on mistakes, but that is the way cell phone service has always been run; going over in minutes, getting text messages without a text plan, etc.

I assume that the reason they give for this it to “better manage our data network”, even though they say the most users use less than 200MB/mo on average. They aren’t going to move the high bandwidth users to that plan. If the wanted to manage there network and help their customers they would allow MB sharing like they do minute sharing between phones on the same account. Then that 2GB rate looks pretty attractive for say a family of four.

Posted by BottyGuy | Report as abusive
 

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