AT&T moves closer to usage-based fees for data

With some smartphone users -- primarily iPhone owners -- turning into data hogs, AT&T is considering use-based pricing

AT&T is moving even closer to charging special usage fees to heavy data users, including those with iPhones and other smartphones.

Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, today came the closest he has so far in warning about some kind of use-based pricing. He spoke to attendees at a UBS conference in New York.

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"The first thing we need to do is educate customers about what represents a megabyte of data and...we're improving systems to give them real-time information about their data usage," he said. "Longer term, there's got to be some sort of pricing scheme that addresses the [heavy] users."

AT&T has found that only 3 percent of its smartphone users -- primarily iPhone owners -- are responsible for 40 percent of total data usage, largely for video and audio, de la Vega said. Educating that group about how much they are using could change that, as AT&T has found by informing wired Internet customers of such patterns.

"With landline capabilities, we used that concept and customers didn't know how much data they were using -- including parents who didn't know how their children were using [video and audio]," he said. "Once alerted, they reduced their consumption without anything other than being told that data was being used in an inordinate fashion."

De la Vega's comments on data use were previewed in a keynote he gave in October at the CTIA , but he went beyond those earlier comments today: "We are going to make sure incentives are in place to reduce or modify [data]uses so they don't crowd out others in the same cell sites."

Focus groups have been formed at AT&T to figure out how to proceed; AT&T is already setting up its systems to give smartphone users real-time data on their data patterns, he said.

"What's driving [high] usage are things like video or audio that plays around the clock," he added. "We have to get to those customers and get them to recognize they have to change their patterns, or there are things we will do to change those patterns."

He said he also felt that whatever AT&T does will conform with Net neutrality regulations already in place or under consideration by federal regulators, including the Federal Communications Commission.

Before taking questions, de la Vega also used a 20-minute address to defend AT&T's network, though he did not mention a series of TV ads used to rebut those from Verizon Wireless. Nor did he mention a lawsuit AT&T filed, then dropped, on the matter.

He noted a recent third-party study using driving tests showing AT&T's network outperforms Verizon's on throughput speeds. The study also found AT&T had only slightly more dropped calls than Verizon, with just two additional dropped calls per 1,000 than Verizon.

But his major focus was on network improvements that are under way, including an 850MHz spectrum overlay and installation of HSPA 7.2 software. The HSPA 7.2 improvement will double network throughput speeds with a theoretical maximum download speed of 7.2 Mbit/sec, something that will be complete in six cities by the end of this year, with 25 cities online by mid-2010, de la Vega said.

While he didn't name the six cities -- and a spokesman wouldn't either in a follow-up question -- faster HSPA 7.2 speeds would be noticed "immediately" by iPhone 3GS users. It "...will be smoking," he said.

De la Vega conceded there have been slow network issues for AT&T users in Manhattan and the financial district of San Francisco, problems already noted by many analysts. Networks in both areas have performed "below standards" he said.

In Manhattan, the use of a new 850Mhz channel has helped AT&T "turn the corner...and you'll see gradual improvements," he said. "You'll see this is going to be fixed. We'll do a lot better." The signal on that 850Mhz spectrum travels further than on some other channels and penetrates buildings better, he said.

In the financial area of San Francisco, de la Vega conceded that cell tower antennas "need to be replaced" since they were really designed for older networks. That upgrade has "gone slower than we wanted."

Using HSPA 7.2 will be a good interim step for data customers until LTE technology is installed, de la Vega said. While Verizon is moving ahead with some rollouts of LTE in 2010, de la Vega argued that that coverage will only be in pockets; AT&T customers will have wider access to HSPA 7.2 technology.

AT&T is planning LTE trials in 2010 and commercial availability in 2011, he said.

This story, "AT&T moves closer to usage-based fees for data" was originally published by Computerworld.

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