Why AT&T is increasing its Pricing | Hacker News Reader

Why AT&T is increasing its Pricing

online.wsj.com

12 pointsproee22 comments

The answer "because they want to make more money" doesn't seem particularly insightful.

AT&T is moving from an all-you-can-eat data structure to one where the people who consume the most network pay more.

Of course this wouldn't be a problem if Steve Jobs hadn't made an implicit promise that you'd be able to get all-you-can-eat data from AT&T for $30 on an iPad, motivating many people to buy one. I almost bought one last weekend based on this assumption, now I'm glad I didn't.

But does anyone know whether a high-bandwidth user really costs AT&T significantly more than one wandering around with their phone on downloading just a trickle of data. AT&T already paid for their infrastructure, right?

Marginally, a high bandwidth user would not cost that much extra than a "normal" user because most of AT&T's infrastructure costs are probably fixed.

However, the opportunity cost of a high bandwidth user is much greater, because their use might be denying 100 other "normal" users access to the network. If 25% of those users decide to cancel because their service sucks, then AT&T has lost significant revenue.

*Note I am not apologizing for AT&T at all, in fact I think they are evil.

The problem with the 100 "normal" users is the number of support calls they generate.

It's a tough trade off to make. The way I see it is that you can plan for the increase in data usage and save lots of money on support staff.

The commoditization of wireless access is happening and it seems like AT&T/Verizon are making it easy for someone else to enter the market. Clearwire & Sprint are quickly rolling out a 4G network in major metropolitan areas offering unlimited service for $30/month.

I'm still genuinely perturbed that people think the integrated 3g here is a good deal. I got the WiFi iPad, specifically so I could choose the right data provider and get on-the-go data for my MeFi. (which would also support my iPhone, my friend's iPhones, etc).

I know integrated services are good, but i'm honestly not sure i want a device which packs several components each with a per unit cost of > $20. I'd much rather look for competitive deals. Same goes for GPS.

Now, if we couldn't only get them to talk better to each other....

If you had bought one last week then you would have gotten the all you can eat plan for $30.

I think that plan is still available until next monday, unless I'm mistaken and it ended last monday...

The point (for at least the ipad) was to get the ability to get that plan only in the months you need it, not all the time.

>If you had bought one last week then you would have gotten the all you can eat plan for $30.

But you can't sign up for the unlimited plan and turn it off whenever you please, which is how Apple is still advertising the iPad despite these changes being announced. [1] At this point nobody can a new iPad and still get this old pricing, given that the iPad is backordered 7-10 days and the changes take effect in 4 days.

[1] http://www.apple.com/ipad/3g/

How can they continue to advertise unlimited? This is downright lying.

What I've read is that as long as your plan is on auto-renew you can keep the $30/unlimited but it will not be available as a new package. In other words, if you stop auto-renew and then enable a package you will have to choose one of the two new plans.

The comparison to Apple is kind of a side-show to the real problems facing AT&T. AT&T is suffering tremendous negative consumer perception, and they don't have any significant prospects for future growth, so their stock goes mostly sideways despite the fact that their business is solidly entrenched by ironclad spectrum licenses and consumer lock-in service contracts. It's not that they're struggling. Their quarterly report shows quite the opposite:

http://www.att.com/Investor/Growth_Profile/download/master_Q...

For the three month period ending 12/31/2009 they posted $13.8 billion in revenue and $3.4 billion in income for their wireless division. Not to shabby.

The bottom line is this: they're raising prices because they can. Verizon, Sprint, and T-Mobile will happily follow suit once they've observed any potential customer-base attrition and are convinced that they can do the same without repercussion.

In this context, the comparison to AAPL just seems silly.

They're not only raising prices because they can, they're raising prices because they should. Higher prices will allow them to invest more in upcoming technologies like 4G networks.

- I don't mind paying more if I use more. - I do mind, however, if someone paying the same as me is ruining my connection.

This is pretty much the greatest change ever.

I'd consider myself a heavy iPhone user, and yet the most data I've ever used in a month is 175MB. Why?

* My email is set to download manually. * I buy and purchase apps and music using the computer instead of over the 3G. I update my apps over the computer as well. * I don't stream music, and I don't use YouTube very often.

Despite the fact that it's not uncommon for me to be surfing the web on my phone for more than an hour a day, I've never come close to the limit. For me, not only am I going to save $15 a month but the service is going to get a ton faster too. How can anyone consider this a bad thing? Just plug your phone into the computer when you want to update your apps, and that's pretty much the only change most people will need to make to save $15 a month.

I'm right around 175MB too, but for me that's too close for comfort. I don't want to worry about hitting 200MB one month. If they offered 500MB, or 750MB I'd certainly get that.

Going over the 200MB plan isn't such a big deal, as long as you don't go waay over. I'm in the same boat. On average, even with the occasional overage I'll probably be spending less than I did with the $30 unlimited plan.

I think network infrastructure and retail mobile operators should be separated by legislation and network infrastructure companies should not be allowed to favour one or another retail operator. This would help competition as launching even a national retail operator wouldn't require anymore to invest heavily in network infrastructure as well as it would force network infrastructure operators to be more competitive because large retail operators would probably apply a lot more pressure on them to invest in their networks than individual customers.

This would help to get rid of the current oligopoly in mobile communication market and individual customers would win.

Comparing stock prices directly for these two companies is ignorant - they are completely different. AT&T is an ancient telco with dividend, while Apple is a (relatively) young, tech, growth stock.

Calling a $250 billion company a young growth stock seems somewhat ambitious. They're dominant in several product categories, a very significant player in others, and have room for really significant growth in only a few.

Much like AT&T, I suppose.

Personally I'm bearish on Apple's long term prospects for this reason: right now they're making a killing on selling mp3 players, a category in which they have a market share approaching 100%. But this is a dying category -- in the future people will increasingly listen to music on their phones, and Apple has some very serious competitors who aren't going to let Apple take over the entire mobile phone market.

>Apple has some very serious competitors who aren't going to let Apple take over the entire mobile phone market.

Serious? Please. They'll be serious when they get standard Android releases that upgrade within months after the version release. As it is now, the MOTO Cliq is still running 1.5, and the G1 is still pegged at 1.6.

As is now, android is fragmented in pretty much equal thirds (1.5, 1.6 and 2.1), and Symbian requires C++ to get much done in it.

Google refuses to acknowledge that people aren't getting updates for the phones they've purchased, and that apple is eating their lunch by releasing new Os versions even for their oldest phones still.

I'm very pissed off at Google here for this. I'd really like Android to be a competitive chance against the iPhone, but once the iPhone gets on Verizon, I think you're going to see Android adoption tank.

Edit: Additionally, Google refuses to go the last mile to get paid developer accounts working for more than 9 countries. This blows up the Android ecosystem, as there are absurd levels of "good enough" free apps out there pushing out fantastic paid app development.

And not to mention the copyright infringer aspect enabled by the busted "returns" system. It's absurd it's trivial to keep an app you pay for then return, yet they force devs to allow a user to return the app.

I'm very pissed off at Google here for this.

Clearly so.

Yes, and both camps accuse me of being a lover for the other. As a professional app developer (mostly iPhoneOS, a little Android though), it's more my glare is leveled at the strong deficiencies in BOTH platforms.

I don't object to a bandwidth cap. I object to not knowing when I'm over the cap and getting a $1000 bill.

I wish they would just turn off my service if I reached a cap, or at least notify me.

This title is misleading. The article isn't very good and certainly doesn't have any real answers. It's pure speculation.

Reply on news.ycombinator.com