May 11, 2009
The Wall Street Journal posted an interesting article today detailing how the iPhone and its many, many users have crippled AT&T's network, and how their data related revenues will begin to decrease once the new user market plateaus. After outlining all of the usual information that we have already heard, they give a solution to the problem: stop offering unlimited data to smartphone users. In the article they outline the usual numbers, like how iPhone users download games, video, and other web related data about two to four times more than other smartphone users. They also mention that iPhone users are more likely to use web-based applications and surf the Internet more. Because of all of the abilities and popularity of the iPhone, AT&T has had to keep spending money on upgrading their networks at an alarming rate, which actually ends up being about $9 billion last year on implementing new wireless spectrum (like 4G) and $6 billion annually on overall capacity. With the current new user market slowing down, where is all of the money going to come from? They surely can't solely bank on data revenue, or can they? The new networks should be more efficient, and once implemented, the payoff will be well worth the cost, but the difficulty is getting to that point. The Wall Street Journal states that the best short term solution would be to abandon unlimited data pricing plans, which would obvious help counter the costs of heavy users. From a business standpoint, this is obviously the best solution, but it definitely wouldn't be the easiest. The competition is already driving down the price of monthly service plans that include unlimited text, unlimited voice, and of course unlimited data. With all of that competition, AT&T would have a tough time convincing their iPhone users that this is the only solution left available. You also have to look at it from a user's standpoint. If it wasn't for the iPhone and all of its users, AT&T wouldn't have nearly as much revenue or subscribers, so the iPhone users are already, in a sense, paying for all of those upgrades. So what do you think, would it be fair for AT&T (or any wireless carrier for that matter) to charge heavy users more for their data plans since they are the biggest strain on the system?