The Good, the Bad and the Ugly of AT&T's New Pricing Plan

Carriers keep discovering that if you give people access to fat pipes, they're going to use them. That's good for innovation, but on the wireless side, it can cause problems for the carriers' bottom lines.

The answer to that problem would be usage-based broadband. What's key to understand here is that few folks in the industry believe it's possible to offer the level of mobile broadband that people want on current wireless networks — even after carriers switch to more efficient technologies like LTE. An exception might be Clearwire, which has deep spectrum resources when compared with the other major carriers. Indeed, Clearwire's Mike Seivert said that currently its mobile customers consume an average of 7GB each month, a feat that would cost $75 a month on AT&T's new pricing plans (on Clearwire it could cost $40-$55). AT&T's pricing has taken current usage into consideration, with the carrier claiming that 98 percent of its users consume less than 2 GB per month, while 65 percent consume less than 200 MB. But in the long term, it isn't a great option for consumers, and when it comes to the tethering fee, is downright punitive. It's also inconsistent with managing user demand for broadband given that one reason for the shift is to manage scarce spectrum resources and prevent network congestion. Instead what it does is push more subscribers into a higher tier of service by creating an extremely low-usage tier with high overage fees, and a higher-usage tier with fees that, comparatively speaking, are much more reasonable. For example, using 201 MB on the lower-usage, DataPlus plan costs $30 whereas $25 on the DataPro plan will yield up to 2 GB. If you're anywhere in that broad middle (or worried about landing there), you're going to select the 2GB tier, even though most iPhone users use an average of 500 MB. That's not ideal, and the $20 fee for tethering is simply paying AT&T for the privilege of using your phone to connect your laptop to the web. Basically that fee is a $20 "Keep Your Laptop Off the Network" sign.