AT&T Wireless announced last Friday that it will begin taking steps to throttle the data rates of heavy users on its unlimited data plans starting October 1. In the statement they tried to downplay the impact, saying they would "reduce the data throughput speed experienced by a very small minority of smartphone customers who are on unlimited plans--those whose extraordinary level of data usage puts them in the top 5 percent of our heaviest data users in a billing period. In fact, these customers on average use 12 times more data than the average of all other smartphone data customers."
Under the plan, users who fall into that top 5% category for a billing period will have their data rates cut back for the remainder of that billing cycle. They will not be charged extra and their data rates will be restored at the start of the next billing cycle. The customers will receive warnings as they approach the threshold.
AT&T notes that the limit is computed for their cellular data network usage only, and not for Wi-Fi usage. Their customers will have access to AT&T's 26,000+ hot spots at no additional cost.
Keeping "on topic," they conclude the statement by noting, "But even as we pursue this additional measure, it will not solve our spectrum shortage and network capacity issues. Nothing short of completing the T-Mobile merger will provide additional spectrum capacity to address these near term challenges."
Needless to say, there is some disagreement on that point. In a June 16 speech at Stanford University's Graduate School of Business CTO Forum, Sprint's CEO Dan Hesse said AT&T, "got big guffaws from all of us in the industry when they said: 'Acquiring T-Mobile will help us build 4G in rural areas....' What the heck does that have to do with it? They're already sitting on a ton of unused spectrum in rural areas, just like all of us are."
One funny man who’s not laughing is Senator Al Franken (D-MN), one of the more vocal opponents of the deal. In a letter to the FCC and the Department of Justice, Sen. Franken makes several arguments against the merger, asserting that it would undermine competition, and risk forming a duopoly that would enable AT&T and Verizon to exclude competitors from the market. He goes on to say that it would result in substantial public interest harms, higher consumer prices, decreased choice, job losses and would stifle innovation.
Following Dan Hesse's argument, the Senator says that deployment of an LTE network in rural America does not require a merger, and the flaws in the plan cannot be rectified with conditions like requiring divestitures. He wraps up by pointing out that, "AT&T has a long history of evading measures designed to curb its anticompetitive behavior." I guess it's safe to say he's not feeling the love.
Back to the data-throttling, the levels of data use that would qualify a user for throttling are associated with "streaming very large amounts of video and music daily over the wireless network," however there is a potential impact for enterprise users. I’m certainly not hitting that level reading emails and checking Dictionary.com for the Word of the Day on my BlackBerry, but businesses are looking at using mobile devices and tablets in particular for a wider range of applications. That list often includes sales presentations that could involve a lot of video. Further, if we move to a BYOD model and the user is streaming videos all day, what happens to the performance of enterprise apps when they hit the throttling limit?
What we are seeing is the continuing evolution of the wireless business. All-you-can-eat plans launched the wired Internet (at least in countries where we also had unlimited local telephone service for our "modem line"), and they have had the same impact on mobile data. Of course it took the introduction of the iPhone to demonstrate the possibilities, and unlike the wired experience where cable modems and DSL (along with major investments in the backbone infrastructure) provided a solution to the capacity problem, there's only so much radio spectrum to go around and only so much efficiency we can squeeze out of it.
The FCC is hoping to free up hundreds of additional megahertz of radio spectrum but they are locking horns with the National Association of Broadcasters. Even if they win it will take years to auction the spectrum and put it into production. In the meantime, the operators are promising video is going to be the "next big thing" with the advent of 4G. Cisco estimates mobile data will grow by a factor of 26 between 2010 and 2015, and the operators don’t have that kind of spectrum lying around, so clearly something has to give. All but Sprint have ended unlimited data plans for 4G, and I guess those of us with grandfathered unlimited 3G plans just found out what overselling network capacity will mean to us.
Worldwide Mobile Data Traffic
