AT&T and Usage-Based Billing

I admit that I have been astounded at the amount of media attention and public ire directed at AT&T for its intention to eliminate unlimited wireless data plan. It is a significant development, but not earth shattering. Besides, their unlimited plan -- like those of nearly every carrier and ISP, including wireline broadband -- was never truly unlimited.

What seems to be fueling the media attention is that the often, though improperly, tied issues of network neutrality and usage-based billing are interpreted as a morality play. That is, the evil corporations versus the good people, or the evil file sharers and video addicts versus decent businesses just trying to earn a reasonable profit. This emotionalism is not only misplaced but very silly.

There is an enduring animosity by many towards the former telco monopolies (and their somewhat-oligopoly present) that breeds distrust. Although that distrust is often justified, or at least requires continued consumer vigilance, these are still simply business trying to both please their shareholders and their customers by offering services that are useful and valuable. Good and evil have nothing to do with it, except to distract attention from what I believe are the real issues: competition vs. regulation. I have certainly harped on this before.

Instead we get uninformed opinion about network engineering and the role of government in a (hopefully) free market. It seems there is an inverse relationship between expert knowledge and willingness to spout strong opinions. How many consumers really understand network engineering, engineering economics, law and regulatory process? Not many it seems if I can go by what I've been reading. This isn't surprising since they are complex and nuanced fields that can seem misleadingly accessible to non-experts.

I sometimes have to shake my head at some of the wrong-headed, off-the-cuff attempts by a few to tell the carriers how to engineer and build their networks. As with BP's woes in the Gulf of Mexico where there are newly-minted media "experts" assessing and making recommendations about junk shots, top kills and capping -- which is entirely pointless -- when their focus ought to be on the desired outcome of stopping the leak, AT&T subscribers and industry observers should be less concerned with dictating to AT&T's network engineers and business managers, and focus instead on the desired outcome of a vibrant competitive market for mobile and wireless data services.

However, my intent is not to lambaste those that are reacting to the AT&T announcement -- there are real concerns that deserve a hearing -- but to suggest that it is more worthwhile to focus on competitive market forces and recognize that businesses do deserve the opportunity to profit from their operations. In a free market no one is entitled to specific outcomes. If we can, all of us -- service providers and consumers -- should strive to keep the regulator at some remove since when they do get involved it typically only serves to distort the market and ultimately satisfy no one.

AT&T is not evil, just another old and perhaps venerable corporation adjusting to new market realities. They are doing a lot of things right and a lot of things wrong. That's their business, and it is in the hands of their shareholders and managers. If they stumble badly, consumers do have some alternative choices. Their primary dilemma is perhaps summed up by this point:

After this announcement AT&T is still a dumb pipe, and I think they’ve come to the conclusion that this isn’t going to change.

This is exactly right. As a dumb pipe they have little choice but to bill for use of their network since their ability to charge a premium for value-added services, even ordinary voice calls, is rapidly declining. Unfortunately they are not yet doing it right with their current price tiers since -- regardless of the specific data volumes and price points -- because you aren't warned when you cross a boundary. This unpredictability of mobile phone bills is already a major issue and it will only get worse now that the government's attention has been drawn by broad-based public outrage: pretty much everybody has a mobile phone and they vote. This is one area where I feel confident in predicting that carriers in the US will follow the European example of warning users when they approach rate boundaries.

Unfortunately the problem here in Canada is worse and is unlikely to be be resolved as quickly. Our prices are higher and will remain higher until competition takes hold. Even then the prospects are uncertain. Hopefully the US lesson that is about to be learned will influence the CRTC. But don't hold your breath.