Posts tagged AT&T
AT&T Hacker Weev Is Live-Tweeting From Jail
Apr 3rd
Andrew Auernheimer, the hacker also known as “Weev” who received a 41-month prison sentence for public shaming AT&T in 2010, appears to be live-tweeting his days at the Brooklyn Metropolitan Detention Center (MDC).
His twitter handle, @rabite, sprang back to life on March 31 — aka Easter Sunday — with a notification of his whereabouts, and quickly picked up steam from there. The religious connotations of his digital resurrection definitely weren’t lost on the occasionally cocky Auernheimer, who has tweeted numerous, though presumably ironic, Christian references such as, “I spread the gospel of cryptosystems…” and “I am your only hope for salvation against the CFAA (Computer Fraud And Abuse Act). Exalt me.”
How Weev Does It
How is a prison inmate tweeting from jail without an illegal cell phone or Internet access? Federal detention facilities such as Brooklyn MDC don’t have the latter, and claim not to allow the former.
The answer is the Trust Fund Limited Inmate Computer System, or TRULINCS. The system does not grant inmates access to the Internet; rather, it provides electronic messaging through an account with Corrlinks.com. It’s meant to facilitate communication between prisoners and family members, although it turns out to let inmates send tweets via email as well.
(For those out there inclined to decry any seemingly questionable use of taxpayer money, TRULINCS funding is “provided entirely by the Inmate Trust Fund, which is maintained by profits from inmate purchases of commissary products, telephone services, and the fees inmates pay for using TRULINCS,” according to the Federal Bureau of Prisons FAQ.)
Live From Brooklyn Jail
While Auernheimer certainly isn’t the first person to tweet from behind bars (see Prodigy of 90s hip-hop duo Mob Deep), he is certainly the first hacker and heavy Tweeter to use the messaging service so frequently it could be considered live-tweeting from jail. Just this morning, Auernheimer seems to have caught on to his unique position.
But it has definitely not been all fun and games (and Internet activism) for Auernheimer. When not discussing his case, he’s been voicing his concerns over his incarcerated lifestyle, namely the fact that he has celiac disease and must maintain a gluten-free diet, something not easily accommodated by the various detention centers he’s been moved through of late.
Despite the health concerns, Weev’s hacker spirit has remained intact. “I feel not a single gram of remorse for aggregating data from an API that AT&T admitted was public,” he tweeted on Monday, and went on with to write this morning, “Every day of this upcoming 3 years is worth it to defend the rights of the Internet. I’d do it all over again. IDIFTL,” an acronym for the popular hacker and Internet prankster justification “I do it for the lulz.”
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Verizon Fell Behind AT&T In Q4 With 9.8 Million Smartphone Sales
Jan 9th
In a note to the Securities and Exchange Commission, Verizon Wireless noted yesterday that it sold 9.8 million smartphones in the fourth quarter of 2012. In the brief release, Verizon noted that the total smartphone sales included, “a higher mix of Apple smartphones.”
Unlike its top rival AT&T (which yesterday said it had sold in excess of 10 million smartphones last quarter including record numbers of iPhone and Android devices), Verizon has shown more historical balance between the two dominant smartphone operating systems. In the third quarter of 2012, Verizon sold 3.1 million iPhones out of 6.8 million total smartphones, good for 45.5%. Verizon did not give a total on how many iPhones it sold in its SEC note for this last quarter, but expect the number to be closer to a 50-50 split with Android.
iPhone’s Magic Powers
The question to be asked is why would Verizon mention iPhone channel sales in its SEC note at all? Well, right or wrong, the carriers (and hence, investors) tend to think of iPhone owners as more lucrative consumers. iPhone owners tend to be loyal, thus giving carriers guidance for how many net postpaid subscribers they will have years down the line. So, if I am a carrier, I want to show investors that I have a large amount of people using Apple products as a sign of the health of my business.
As the rest of the fourth quarter smartphone sales from the top carriers in the United States come in, we are once again likely to see that Apple dominates the top of the American smartphone market. In Q3 2012, Apple controlled about 58.1% of U.S. smartphone sales for the three largest carriers (AT&T, Sprint and Verizon). Of those three, AT&T provides the biggest cushion for Apple, taking between 70%-80% of its total smartphone sales. As noted yesterday, AT&T likely sold more than 7.6 million smartphones last quarter. If Apple has a stronger 4Q with Verizon, the iPhone may break the 60% mark for control of U.S. marketshare among the big three.
Research analytics firm comScore notes that Android still controls the overall U.S. smartphone market. According to comScore Mobile Lens, Android U.S. subscribers grew 1.1% between Aug. 2012 and Nov. 2012 to a total of 53.7%. Apple grew 0.7% in that same period to 35% of U.S. subscribers.
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AT&T Tops Android, iPhone Sales Record Last Quarter
Jan 8th
AT&T just had its biggest smartphone sales quarter in history. In an announcement today, Ma Bell said that it sold more than 10 million smartphones over the fourth quarter, including record sales for both iPhone and Android sales.
If you are an iPhone or an Android fan, there are definitely things to like about AT&T’s announcement. Yet, if you look closely, you will note that there is more for iPhone fans to enjoy than for Android.
Of the three major carriers in the United States that carry the iPhone (AT&T, Verizon, Sprint), AT&T has long had the highest rate of Apple users. This is a lasting effect of the fact that AT&T had exclusivity on iPhone sales in the U.S. for nearly four years (July 2007 until March 2011, when Verizon came out with its iPhone 4S). In the second quarter of 2011, 72.5% of smartphone purchases on the carrier were of the iPhone variety. In the third quarter, the iPhone constituted about 70.1% of its AT&T’s smartphones sales.
We can reasonably assume that AT&T’s sales rate of iPhones will be approximately 68%-70% for the fourth quarter, given the historical trend of Apple sales at the carrier. Yet, if AT&T is saying that Apple sales were a quarterly record, then the number should be higher than the 7.6 million iPhones it sold in Q4 2011.
The leftover AT&T sales presumably went to Android, though it is curious that AT&T did not mention Windows Phone sales in today’s release. Nokia released the Lumia 920 exclusively to AT&T in Q4 and HTC released its Windows Phone 8X to the carrier in the quarter as well. It is likely that AT&T sold between 2.1 million and 2.4 million Android devices during the holiday season, if we taking the “record” Android sales claim from the carrier seriously.
As companies give final reports on 2012 numbers, we note that each successive story shows that last year was the year that mobile truly exploded. Look for more record breaking numbers to come from other manufacturers, carriers, app developers and services as companies continue to report their numbers from last quarter.
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Qualcomm & AT&T Look To Accelerate The Internet Of Things
Jan 7th
In the not-so-distant future, everything in our lives is going to be connected to the Internet of Things. Fire hydrants, medical equipment, toasters. Really, everything. Yesterday a “smart” fork was introduced to bring “metrics to your mouthfuls.” If you can slap a sensor to a device and add wireless connectivity, eventually it will be connected to the Internet.
Qualcomm and AT&T want to make the process of creating Internet of Things devices and applications easier. Today the companies announced a joint project called the Internet of Everything development platform. Based on Qualcomm’s QSC6270-Turbo chipset and Gobi modem for 3G connections, the Internet of Everything platform aims to decrease time to market for IoT projects. The development platform will use AT&T’s cellular data bandwidth to connect things to the Web. The chipset supports Oracle’s Java ME Embedded 3.2 to write the programs necessary to create IoT devices and applications. The Internet of Everything platform should be available to developers in the second quarter of 2013.
The Real Benefit
The idea is to lower the barrier to entry for connecting devices to the Internet. As such, it is a good sign that two of the leading American technology companies are starting to take IoT seriously. When we wrote our Futurist Cheat Sheet on the Internet of Things, we noted that much of the technology to create a robust Internet of Things possible is already in place – it just needed more infrastructure refinement to speed adoption.
“This IoE development platform with Java support is a tool to extend the power of our integrated chipsets to application developers,” said Kanwalinder Singh, /SVP of business development at Qualcomm Technologies in a press release. “We are excited that AT&T shares our vision of a cellular-connected IoE, and by the opportunities that will be created by the AT&T developer community.”
Qualcomm and AT&T join a growing community of machine-to-machine (M2M) companies working to make the Internet of Things possible. The leaders in M2M development over the last several years have been companies like Cosm, Numerex and KORETelematics, while other consumer- or enterprise-focused companies like Google (with Android) and Research In Motion (with its QNX-based BlackBerry 10 system) also have software platforms that could provide the capability to integrate items like home utilities and aspects of automobiles on the Web. Apple has not specifically built any products for the Internet of Things, but its iOS mobile operating system could easily be outfitted to run a variety of items beyond the iPhones and iPads that currently run iOS.
Unlike other aspiring technology sets (Near Field Communications, for instance), IoT development lends itself to a variety of business applications. Name an industry, and entrepreneurs and innovators will be able to find a way to connect it to the Internet. Qualcomm and AT&T specifically mention healthcare, energy and automotive as sectors that will be able to use the Internet of Things to provide tracking, remote control and analytics.The Internet Of Things will give businesspeople capabilities that they could previously only track through inference, not directly.
Image courtesy of Shutterstock.
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Spotify, AT&T & The Perils of Renting Our Music From The Cloud
Oct 23rd
This morning, for the first time ever, I jogged in silence. Other than my own rhythmic panting, my sneakers hitting the pavement and the urban soundtrack that my brain has long filtered out, I heard nothing as I ran across my neighborhood. For once, there wasn’t music playing.
Normally, I stream music from Spotify on my iPhone, but today the app — or my data connection; I wasn’t sure which — was not cooperating. After waiting for “Connecting…” to disappear from the top of the application and for the track names to turn from grey to black, I force-quit Spotify. Then I fired it up again. And again. Same thing. I started my run without music, figuring I’d check back with Spotify in a minute or two to see if anything had changed. It hadn’t.
Running in silence was actually kind of nice, but it got me thinking. Do I really want to keep my music in the cloud? Suddenly, I was cut off from most of the music I listen to day to day. Sure, I could start searching for songs on SoundCloud or YouTube, but stringing together more than one track would be too tedious to do while trying to run. I do have several songs favorited on SoundCloud, but they’re a random assortment of things and streaming them back to back probably wouldn’t suit my situation or mood. On Spotify, I had entire albums starred and a playlist I made specifically for running. And now, if only for 45 minutes, I was locked out of it all.
It was my own fault, mostly. For the past 15 months, Spotify’s mobile app has been my chief source of music while I’m on the go. It’s been a pretty good experience, on the whole. I actually let Spotify replace my iPod and haven’t used iTunes to manage or sync my music since last summer. Other than predictable scenarios like flying in an airplane and riding the subway in New York, that experience had never been truly interrupted until today. Maybe I shouldn’t be relying so heavily on the cloud for music.
When I got back to my house, my phone connected to my home WiFi network and my music loaded instantly. The issue, it turned out, was with my phone’s connection, not the Spotify app. In fact, my excessive music streaming is almost certainly leading AT&T to throttle my (grandfathered) unlimited data connection, which uses 33 GB per month. The biggest plan they offer new smartphone owners is 5GB. Yikes.
The Net Has Altered Music, But Let’s Not Store It There
My phone wouldn’t use so much data if I was storing all that music locally, which is actually something Spotify allows subscribers to do. Premium subscribers can sync tracks from its massive library to their devices (much like you can with Rdio), as well as transfer their own local audio files, iPod-style. The latter feature is one thing that sets Spotify apart from its competition. Unfortunately, every time I’ve tried to sync my playlists and transfer my own MP3s from the Spotify desktop client to its mobile app, I’ve run into problems. I’m not the only one. After I went back and forth with their support team, reinstalled the app and re-synced everything twice, the issue persisted and I gave up.
Did AT&T throttle my connection? Did Spotify screw up its mobile app? Are my phone’s OS and apps up to date? Did I try force-quitting the app and reconnecting? The mere fact that these variables exist suggests that the Internet isn’t the best place to store our music. Not now. Probably not ever.
The future of music is not, dare I say it, in the cloud. Instead, our music collections will be both Web-hosted and locally-stored and, like our books, both digital and analog. As long as a data connection can be interrupted — by a subway tunnel, a natural disaster or a dictator — keeping our most cherished things on some company’s servers seems like a bad idea.
We might, for example, stream from Rdio or Spotify to our phones, sync whatever will fit on those devices, keep a bigger-capacity iPod (or perhaps a Pono player) as a backup and hang onto some favorites in a physical, often analog format. Even if most of what we listen to is piped to our speakers over the Internet, we’re still going to want to own some meaningful segment of our music collections. I don’t care how fast and ubiquitous the networks get. They’ll never be failproof.
See Also: Screw The New iPods: We Need Better Music Players
If digital music’s future indeed isn’t primarily cloud-based, Apple doesn’t appear to see it that way. The company that revolutionized music consumption with the iPod is in the process of phasing out its high-capacity classic iPods in favor of iOS-based devices that max out at 64 gigabytes of storage. When the new iPod Touch was announced last month, our own Jon Mitchell eloquently bemoaned this state of affairs, decrying these smaller and inherently cloud-dependent devices.
By no means am I contemplating the end of my Spotify subscription. Aside from the annoying syncing issues, the service is excellent. Its third-party app platform offers some of the most promising glimpses at how we’ll discover and interact with music in the future. But while I’ll continue to stream music to several devices every day, I’m looking to the cloud as a supplement to — not a repository for — my music collection.
Photo by Niki Odolphi
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The Real Reason AT&T And Verizon Are Pushing New “Shared” Data Plans
Sep 4th
A new iPhone this year may mean a new “shared data” wireless plan for you, too. They may or may not save you money – that’s not the point. They’re really designed to put the wireless carriers in a better financial position for the future.
Get Ready To Share
With Apple’s new iPhone expected to launch in mid-September, expect to hear a lot of noise about newish, “shared” service plans from Verizon Wireless and AT&T, the biggest U.S. wireless carriers. The big idea: Instead of having separate pools of data allowances between different devices – an iPhone and iPad, for example – all of your family’s devices draw from the same pool.
Verizon already requires these plans for new subscribers, and AT&T says it will require them for subscribers who want to use Apple’s FaceTime video chat service over the mobile internet. (Translation: Eventually, you’ll end up using one whether you want to or not.)
Here’s how it works: For each device, you pay a monthly “access” fee. At Verizon Wireless, for example, this ranges from $40 per month for smartphones to $10 per month for tablets. This provides unlimited talking and texting on phones – no more minutes to keep track of. Then, you choose a monthly bucket of data that all your devices use, ranging from $50 per month for 1 GB to $100 per month for 10 GB.
The pitch to the consumer is that these plans are smarter for today’s families, which often have multiple smartphones and tablets. If you’re not using all the iPhone data you’re paying for, why not be allowed to use it on your iPad?
The Business Motive
Perhaps this pricing realignment makes some sense for subscribers. But it really makes sense for the carriers.
Consider how much more time you spend using a smartphone’s data signal versus making voice calls. Since I started using an iPhone in 2008, my data usage far has far outpaced my voice usage. Last month, I used 70 voice minutes, but probably spent over 50 hours using data. (Meanwhile, I’ve accumulated 3,900 “rollover” minutes on AT&T – a near-worthless benefit that made much more sense a decade ago.)
But while our smartphone data usage could now be 10 to 20 times our voice usage (if not more!), the amount of money we spend on voice is still usually half or more of our monthly bills. Below, I’ve charted the last 10 years’ worth of Verizon’s voice and data service revenues. Overall service revenue has more than tripled, but data is still only about 44% of Verizon Wireless’s service revenue.
With faster wireless networks – the new iPhone is expected to work on Verizon’s 4G LTE network – and services like Skype and Apple’s FaceTime and iMessage, which “disrupt” the carrier voice and messaging services, it becomes even more important for carriers to shift billing toward data plans.
With more connected devices launching all the time, these new “shared” plans offer greater convenience to subscribers – at a potentially higher cost. But what they really do is insulate carriers from potential disruption to outdated service models, and provide a more stable, logical revenue model for current and future wireless usage.
Phone and tablet photo via Shutterstock.
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AT&T To Limit iPhone’s FaceTime – Challenges FCC’s “No Blocking” Rule
Aug 23rd
AT&T’s decision to make Apple’s FaceTime video chat feature available on its cellular network only through its premium data plan has raised questions over the interpretation of the federal government’s “no blocking” rule for wireless carriers – and whether smartphone users will have to pay more for video conferencing and other services.
Starting with the next version of Apple’s iOS operating system, expected in mid-September, FaceTime will be available over cellular network as well just Wi-Fi connections. AT&T is the first major carrier to announce plans to rein in that use by making the service available only to subscribers of its new Mobile Share data plans. Subscribers with a tiered or unlimited plan are out of luck.
So far, other carriers have been silent on FaceTime. Verizon Wireless did not immediately respond to a request for comment, and Sprint essentially said no comment: “We cannot specifically comment on future pricing decisions,” a spokeswoman said in an email.
AT&T Denies It’s Violating Net Neutrality
AT&T’s handling of FaceTime has sparked debate on whether AT&T’s decision violates the net-neutrality rules set by the Federal Communications Commission. The carrier adamantly in rejects such allegations.
First of all, FaceTime is still available on Wi-Fi without any restrictions, so the AT&T says it can’t be accused of preventing someone from using the app. Secondly, the carrier is not blocking a competing service, because it doesn’t offer a video chat app.
AT&T goes on to argue that the FCC rules do not require carriers to make “preloaded apps” available, only downloadable apps that compete with their voice or video telephony services.
“Nonetheless, in another knee jerk reaction, some groups have rushed to judgment and claimed that AT&T’s plans will violate the FCC’s net neutrality rules,” AT&T said in a statement Wednesday. “Those arguments are wrong.”
Critics Say AT&T Is “Pretending”
One of the groups that would fit AT&T’s “rushed to judgment” categorization is Public Knowledge, a nonprofit group focused on Internet law. Public Knowledge says AT&T’s interpretation of the rule is wrong, because the carrier is pretending that the FCC categorizes apps.
“The FCC’s Open Internet rules do not distinguish between pre-loaded and downloaded apps,” John Bergmayer, senior staff attorney at Public Knowledge, said in a statement. “They prevent carriers from blocking certain kinds of apps – period.”
Bergmayer argues that AT&T just wants FaceTime fans to pay more. At the same time, the carrier wants to stifle the use of video conferencing apps like FaceTime, Skype and ooVoo, because they compete with other AT&T services.
“There’s no doubt that these apps are a competitive threat to AT&T’s voice service,” Bergmayer said. “But as the FCC made clear in its Open Internet rules, mobile providers must compete with these new services fair and square, and not by engaging in discriminatory behavior.”
No Word From The FCC
The FCC did not immediately respond to a request for comment. Ultimately, the commission will decide which interpretation of its rules is closest to its intent. The “no blocking” rule, as it applies to wireless carriers, states: “Mobile broadband providers may not block lawful websites, or applications that compete with their voice or video telephony services.”
Beyond the net neutrality issues, AT&T is concerned with the impact a data-intensive app like FaceTime will have on network performance and customers’ wallets. For several years after the release of the first iPhone in 2007, AT&T struggled to accommodate the huge increase in data traffic. The poor performance of its network in some major cities made the carrier the butt of jokes from comedians on national TV, as well as ridicule from customers.
Having learned its lesson, AT&T said it would be watching FaceTime usage. “We will be monitoring the impact the upgrade to this popular preloaded app has on our mobile broadband network, and customers, too, will be in a learning mode as to exactly how much data FaceTime consumes on those usage-based plans,” the carrier said. For users of measured data plans, FaceTime usage could quickly become expensive.
AT&T is not treating FaceTime any differently then competing apps. Rather, the debate reflects the passion of Apple’s fan base. Nevertheless, the FCC will need to clarify the no-blocking rule, or carriers will be free to interpret it anyway they wish.
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AT&T to Spend Tens of Millions to Promote Safe Texting
Aug 15th
Texting while driving contributes to nearly 100,000 crashes causing injury or death per year. Loathe to be held responsible for such a grim statistic, AT&T has announced a campaign to stop texting while driving as well as an app to help curb the practice.
AT&T announced a new public awareness effort today as part of its ongoing “It Can Wait” initiative to bring attention to the dangers of texting while driving. The campaign calls for people to make a lifelong commitment to safe texting. It will culminate with a “No Text On Board” pledge day on September 19.
Texting while driving is especially prevalent among teenagers. An AT&T survey showed that 97% of teens say texting and driving is “common” among their friends. About 89% of teens expect to reply to a text or an email on their phones within five minutes or less, whether or not they are driving. It is not just young people, though, as 77% of teens in the survey reported seeing their parents texting while driving.
Texting drivers are 23 times more likely to be in an accident, a study from the Virginia Tech Transportation Institute research department concluded.
AT&T is encouraging its 240,000 employees to take the pledge. The company also will enlist celebrities to spread the word through TV ads, concerts, public appearances and social media channels. Plans call for an aggressive push on Facebook and Twitter to promote the pledge, which can be tracked through the #itcanwait hashtag.
AT&T’s “It Can Wait” program started in 2009, and consumers have likely already seen TV ads or heard radio spots telling people not to text and drive. AT&T is doubling down on its commitment to the issue this fall and will spend “tens of millions” of dollars on the campaign, according to a company representative.
AT&T is not alone in campaigning for awareness of the toll exacted by distracted drivers. The CTIA trade association, the largest wireless trade group in the United States, made texting from behind the wheel its cause of the year in 2011. Verizon has had a campaign against texting while driving since 2009. Sprint released an app called Drive First in 2011 that automatically locks a phone from incoming messages when it is in a car traveling faster than 10 mile per hour. T-Mobile includes a similar function into many of the devices it sells.
The AT&T DriveMode app was released to the Android Google Play and BlackBerry App World stores today with the promise of more platforms soon, including iOS and Windows Phone. When the app is active, it disables some of the phone’s functions such as notification sounds for incoming texts, email and phone calls. It also sends a reply message letting people know that you are driving and will get back to them. Texts and emails cannot be sent when DriveMode is active and it will only allow people to accept and send phone calls to and from five people.
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AT&T and Verizon Earnings Show Who Really Drives the Mobile Economy
Jul 24th
Between AT&T and Verizon, cellular data service was a $13.3 billion business in the second quarter of 2012. Combined, the two have almost 88 million U.S. smartphone (i.e. lucrative) subscribers. These relatively quiet — though not gentle — giants have a firm handle on what happens in the mobile economy.
Verizon and AT&T are making more money than ever, and smartphones are the engines of the growth. Not only is that growth not slowing as the market becomes saturated, it is making the telecom pair the 800-pound gorillas in the nation’s mobile economy.
AT&T has aggressively pushed its customers to smartphones. Almost 62%, or 43.1 million, of its postpaid subscribers (as opposed to pre-paid customers) are using the devices. Verizon has 44.4 million smartphone subscribers, half of its 88.8 million wireless postpaid subscription base.
The iPhone has been instrumental in both companies’ 2012 growth. The iPhone made up 72.5% of AT&T’s smartphones sold in Q2 — 3.7 million of the 5.1 million smartphones sold. Of those 3.7 million iPhones, 22% were new subscribers to the carrier, according to AT&T. Verizon sold 2.7 million iPhones in Q2.
Verizon, by wireless subscriber volume and revenue, continues to be the largest carrier in the U.S. Its total wireless revenue was $18.6 billion in Q2, over AT&T’s $16.4 billion. The two are close enough in postpaid subscriptions and revenue on a quarter-by-quarter basis that it is splitting hairs to note how much bigger one is than the other. AT&T (18.8%) and Verizon (18.5%) posted nearly identical year-over-year growth rates in wireless data revenue.
AT&T and Verizon boast how much more smartphone subscribers are worth to their bottom lines than non-smartphone customers, and in terms of average revenue per user (ARPU), both carriers are faring well.
AT&T postpaid subscriber ARPU increased 1.7% over the same quarter last year, to $64.93, a number it claims is the highest in the industry. Verizon’s Q2 ARPU for postpaid subscribers was $56.13, a record for the company.
From a macro perspective, AT&T and Verizon are the real giants of the mobile economy and some of the largest companies in the U.S. While most point to Google, Facebook, Microsoft, Apple and Amazon has the “Big 5” of the U.S. tech industry, Verizon and AT&T are actually larger on a quarter-by-quarter basis than four of the five, with Apple’s runaway success being the exception.
For instance, Google’s Q2 revenue was $10.96 billion, which is only about 35% of the $31.6 billion that AT&T posted in Q2. The carriers do have larger operating expenses than companies like Google because they carry the burden of building the telecom infrastructure of the U.S., but by any measure, the mobile operators are powerhouses that will dictate how the mobile economy evolves over the next 10 to 20 years.
Mammoth subscriber bases and revenue mean that it will be difficult to disrupt the mobile ecology.
Google, which has sought ways to work around carriers, does not have the capital to build its own wireless infrastructure. Microsoft is more concerned with rebuilding its online properties (which took a $6 billion write-down because of its Web services last quarter). Amazon has neither the incentive nor capital to build its own network. Facebook has enough problems just making money off its robust mobile base.
If one company could shake things up, it would be Apple. As we noted after Q1 2012, the iPhone and iPad maker could have bought the fourth-largest carrier in the U.S. — T-Mobile — with its quarterly revenue alone. Yet, the company is notoriously tight-fisted with its excess cash, preferring to make deals with its supply chain for better component prices than move aggressively into other industry segments.
For now, the terms of the mobile economy in the U.S. will be dictated by the carriers. Smartphones and operating systems that run them may have been created by companies like Google, Apple, Samsung and Microsoft, but AT&T and Verizon remain the confident gatekeepers.
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How AT&T & Verizon Learned to Stop Worrying and Love Data Hogs
Jul 19th
If you can’t beat ‘em, charge ‘em: Not long ago, AT&T execs criticized smartphone users as data hogs. Not anymore. With a series of new pricing plans, both AT&T and its archrival Verizon have decided that digital gluttony is good for business. Now the carriers are looking like the hogs themselves, only they’re gorging not on bandwidth but on the contents of their customers’ wallets.
A month after Verizon introduced a wireless plan that allowed users to share data across multiple devices, AT&T has followed suit. Like Verizon, AT&T designed its new prices to generate more revenue the more people use high-bandwidth apps on their smartphones and tablets. Like Verizon, AT&T charges fees for voice and text even if they go unused. And both companies’ shared data plans charge 50% more per gigabyte in overage fees.
And that’s where the carriers’ hog-like behavior comes into play. No longer are so-called data hogs the 3% of wireless customers who use 40% of the data. Thanks to Netflix, YouTube, online games and apps like Skype, on LTE networks the mainstream customer graduates into a high-bandwidth user. Anyone who upgraded to the new iPad on an LTE network became, overnight, a video hog. Many people will be surprised to discover they’re paying expensive overage fees, and so they’ll logically move into higher-priced usage tiers. Either way, AT&T and Verizon will benefit.
And so, five years after the iPhone kicked off a surge in demand for wireless data, the wireless duopoly of AT&T and Verizon is learning to love data hogs. AT&T CEO Randall Stephenson said as much at Fortune’s Brainstorm Tech conference this week. “We’ve gotten the pricing model right,” he said, “so I don’t think of them as hogs.”
Here’s how Stephenson explained it in detail:
“I’ve kind of conditioned people to think of it this way: We have gotten ahead of the capacity glut here. Now we have a spectrum crunch coming, but I believe the industry has gradually and finally gotten the pricing model right. Once you get the pricing model right, I don’t think of them as bandwidth pigs or hogs. I think of them as services and revenue. It’s not all bad; in fact, data becomes a good thing.”
There are a few things in Stephenson’s comments that should make AT&T customers uneasy. The company that once considered its biggest customers hogs now describes them openly in even more impersonal terms: revenues. And Stephenson is “conditioning” his workforce to see customers the same way. Wireless subscribers aren’t people who love your service – they are pockets of dollars to be fracked by any means necessary.
Stephenson also says with the new shared wireless plans, the industry has gotten pricing right. But what’s right for AT&T isn’t right for its revenues – I mean, customers. The new plans represent an attempt to condition consumers into accepting higher bills. And unless customers are willing to move to a second-tier carrier like Sprint or T-Mobile, they have no choice but to accept plans designed to squeeze money out of them.
Of course, as Stephenson pointed out at the Fortune conference, carriers are spending billions on new LTE networks. AT&T is investing $20 billion this year in networks and other capital expenditures. So, he says, a company with growing capex spending and flat revenue isn’t a sustainable business model.
This would make sense, except that it’s disingenuous at best and untrue at worst. The cost of those new networks will be amortized over years, and AT&T has been seeing $19 billion in amortization costs for the past three years. What’s more, AT&T is spending even more heavily in other areas: nearly $40 billion on marketing and administrative costs, and $10 billion a year in dividends for investors. Why not spend less on marketing and investors to cut customers a break?
Yet AT&T is moving in the other direction. A customer-friendly approach would be to let them choose an à la carte plan based on how they use their smartphones. Those who don’t make many voice calls or who send texts through programs like iMessage should be able to cancel voice and data plans we don’t use. And why not abandon tiers and let people simply buy data per unit used, like gasoline vendors do with fuel for cars?
For years, Verizon and AT&T have used their carrier muscle to force changes that are better for their own profits than their customers’ needs. In a thoughtful piece, the Verge called them the biggest threat to innovation, citing the imperious demands they place on phone manufacturers. This week, 9To5Mac found evidence that AT&T may charge for using FaceTime on its wireless networks. (Stephenson didn’t deny this when he was asked about it, but his bizarre response – “I’ve heard the same rumor” – made him sound sadly out of touch.)
With the new pricing plans, carriers are trying to control consumers as they have controlled phone makers for years. The result will be more profits for carriers and richer dividends for investors. But it will also make for a worse wireless world for everyone else. High-bandwidth apps with innovative potential will languish with smaller audiences, and the mobile web will stratify into upper and lower classes, where the rich enjoy the best features.
There are two kinds of innovations in tech. One that is often celebrated – the creation of great new things people will gladly pay for – and another that few companies will brag about – finding new ways to get people to pay for something they already have. The top two carriers are innovative in the second way. Only now, AT&T’s Stephenson likes to brag about it.
Image licensed via Creative Commons, courtesy of rajthesnapper.
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