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Slate Wants You To Pay More For iPhone Data
Author thinks he's helping, but doesn't understand the sector...
by Karl Bode 12:34PM Thursday Oct 08 2009
There's been a growing call from investors like Craig Moffett for AT&T to ditch their $30 unlimited data plan and migrate to a pure per-byte billing model for the iPhone. Why? iPhone users like to use data, and higher overages means more money. Slate writer Farhad Manjoo has also now decided that AT&T should ditch their unlimited plan, penning a piece for Slate that places the blame for AT&T's network woes on consumers who like to use data, while arguing that AT&T should ditch their unlimited plans. Argues Manjoo:
Every iPhone/AT&T customer must deal with the consequences of a slowed-down wireless network. Not every customer, though, is equally responsible for the slowdown. At the moment, AT&T charges $30 a month for unlimited mobile Internet access on the iPhone. That means a customer who uses 1 MB a month pays the same amount as someone who uses 1,000 MB. I've got a better plan—one that superusers won't like but that will result in better service, and perhaps lower bills, for iPhone owners: AT&T should kill the all-you-can-eat model and start charging people for how much bandwidth they use.
The problem with the "per byte billing is only fair" argument is that true equanimity never materializes under the per-byte pricing models proposed by carriers. The majority of consumers (iPhone or otherwise) use a minuscule amount of data. As such, they should probably pay about $5-$10 a month for data as Manjoo suggests. But carriers will never offer such truly value-centric plans because the majority of their customers would downgrade. While true per-byte billing might sound nice, the metered billing models carriers prefer don't have fairness in mind.

Meanwhile, Manjoo ignores that AT&T consistently generates record revenues despite no wireless CAPEX increase, so the upgrade issues are AT&T's fault -- not consumers. AT&T signed the exclusive deal with AT&T engineers knowing full well the device would impose extra burdens on the network. This isn't the fault of consumers, who have been advertised a seamless broadband experience, it's the fault of AT&T -- who wanted their cake (the influx of iphone worshipers) and to eat it too (no increased network expenditures in order to keep investors happy).

When you factor in the added fees and the insane prices charged for services like SMS that actually cost carriers nothing to deliver, AT&T's making more than enough money to keep the network upgraded under the flat-rate pricing model. Also keep in mind that 42% of all iPhone traffic is going over Wi-Fi. If flat-rate pricing is so untenable, AT&T Wireless wouldn't be consistently setting billion dollar data revenue records each and every quarter.

After he gets done ignoring the fact that per-byte billing isn't really necessary to keep the network upgraded, Manjoo goes on to deflate his own argument by noting one of the bigger downsides of lower caps on the device -- the fact that people won't want to use it out of fear of having to take out second mortgages to pay their bills:
What will Apple say about tiered pricing? Steve Jobs probably won't like it—after all, metered service discourages people from using his device, including spending money in the App Store. Indeed, it's possible that Apple's contract with AT&T prohibits metered online access. But whether it sticks with AT&T or allows other carriers to sell the iPhone, Apple would be wise to consider tiered pricing.
Wait. Apple would be wise to support a shift to lower caps that confuse iPhone customers and make them terrified of actually using applications? Over a network AT&T couldn't be bothered to properly upgrade despite record data revenues? And this is somehow all the consumer's fault for actually wanting to use their iPhones? For an author of a book lamenting the lack of fact-based discourse, Manjoo seems unaware that his support for the industry's quest to move to their version of metered billing will actually wind up with consumers paying more.

AT&T is doing just fine under the unlimited pricing model. Consumers prefer the simplicity over an ocean of surcharges. Why change what's working for both sides, especially if the alternative could prove more costly for users? Per-byte billing might sound good to people not familiar with the nickel and dime nature of phone companies, but the reality is such pricing usually winds up costing consumers more. There's also a legitimate threat that such models will be wielded by carriers as anti-competitive weapons against competing content and services.

Pure per-byte pricing that actually offers value sounds appealing in vague theory, but you'll never see a per-byte billing model that offers real consumer value from the likes of AT&T and Verizon. Even your grandmother knows this.

Update: Phillip Dampier over at the entirely consumer-driven website Stop The Cap also takes a moment to deflate Manjoo's quest for per-byte iPhone pricing.

177 comments .. click to read

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Karl Bode
News Guy

3 edits

4 recommendations

reply to fmanjoo1

Re: Did you read the article?

Did you read the article?
Yes. Did you read mine?
In it, I call for people who are using much less broadband than they are using now to get a discount.
And in mine, I point out how your vision of a per-byte billing model will never actually materialize because the way metered billing is imposed by carriers never actually results in light users paying less money. Usually, metered billing winds up with user's paying higher bills, if you've studied their proposed pricing models.
You say, Slate wants people to pay more. Actually, I'm calling for people to pay less. You just missed that part.
Actually, by supporting the industry's quest to move from flat-rate to metered billing, you're supporting consumers paying more. Of course my article explores that in detail....


Harrison, TN

5 recommendations


Lisa needs braces.

Data plan.

Lisa needs braces.

Data plan.


Middletown, CT

5 recommendations

Per Byte Me

Manjoo can shove his per-byte business model up his ass. 'Nuff said.