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AT&T says it's not an attempt to make more money

As online movie rentals and video streaming services are starting to boom in popularity, one aspect of these services that many users don’t think of is the bandwidth needed by the ISP providing the internet connectivity.

John Donovan, AT&T chief technical officer, has indicated that AT&T will begin testing usage-based internet pricing starting this fall. Donovan asserts that the tests of usage-based pricing is not an attempt to make more money, but is simply required to add more network capacity.

Donovan told Wired.com in an interview, “It's almost a taxation issue. Traffic on our backbone is growing 60 percent per year, but our revenue is not.” From that simple statement it’s hard to support Donovan’s previous claim that the testing of usage-based Internet pricing isn’t an attempt to make more money from its users.

Donovan says that usage-based pricing trials are an attempt to encourage more efficient use of a customer’s bandwidth capacity. To a users that may simply sound like another way to say the ability to punish heavy bandwidth users.

Donovan mirrors statements made by Time Warner when it tried to justify the abhorrent new usage-base pricing of its trial in Beaumont, Texas with regards to the small percentage of customers that use the majority of its bandwidth.

According to Donovan, 1% of AT&T customers account for 20% of its network usage and the top 5% of its users account for 40% of its usage.  The problem with statements like these is that most internet users know many subscribers simply don’t use the internet that much. If you take into account a customer that simply sends and receives email and surfs the occasional webpage compared to the customer who watches streaming shows on Hulu or rents movies on Apple TV is doesn’t seem like a fair comparison.

Maybe only 5% of AT&T’s customers actually use their connection frequently. The rub for many users is that it seems AT&T and other internet providers are simply trying to find ways to get people to use what they pay for with less frequency.

Donovan does point out that he doesn’t view AT&T customers, under any circumstances as pirates. AT&T declined to comment on pricing or bandwidth caps for its usage-based service trials or in what markets the trials would begin.

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Ha
By 67STANG on 6/9/2008 12:19:58 PM , Rating: 2
So glad I cancelled my AT&T DSL connection last year...(because it was so unreliable).

Just crossing my fingers Comcast doesn't follow suit.




RE: Ha
By Souka on 6/9/2008 12:26:48 PM , Rating: 2
I suspect all carriers will do so for their basic "unlimited" service.

Either you get service with a monthly cap, plus $$ per GB over that.... or you pay extra $$ each month and don't have the limit.

I know it sucks, but it does make sense.... I just hope they either give users enough data/month so it's not a pain, or somehow allow certain types of data to not be counted (such as HD movies from Apple).

Perhaps "free" data during certain hours/days like most cell phones do now (eg, "free nights and weekends")


RE: Ha
By CSMR on 6/9/2008 12:40:26 PM , Rating: 2
Not sure about the apple deal, that would be anticompetitive.
But yes to off-peak hours. There should be a much lower price during these hours.


RE: Ha
By 67STANG on 6/9/2008 12:44:15 PM , Rating: 2
A good point for debate is whether or not current customers can have their service agreement modified to allow this rape. I don't see how this can be legal, unless of course there is vague language allowing for this. Now that I think of it, I would guess there probably is.


RE: Ha
By artemicion on 6/9/2008 1:13:24 PM , Rating: 4
Yes, I am guessing that there is no clause in your user agreement with AT&T where AT&T agreed to furnish you with the same service at the same price for all eternity. Just like you probably did not agree to subscribe to AT&T for all eternity.

I have no idea why I'm sticking my head into this debate, but I'm going to toss out a hypothetical anyway.

Hypothetical A:
What if through some hypothetical system of careful auditing, AT&T guaranteed that the amount of money they take in from subscribers is the same whether they charge you a flat monthly rate or a usage-based rate (let's say either way they average $30 per customer) - would you still regard that as consumers being "raped"?

Hypothetical B:
What if instead the amount of money AT&T takes in is actually LESS than what they would take in by charging a flat monthly rate (let's say AT&T would take in a total of $30 million using their current scheme, but would only take in $25 million from subscribers using a usage-based scheme)? Say, AT&T is willing to take in less money because the usage-based rate policy allows them to lower costs and thus realize the same amount of profits with lower revenue? Would you still regard that as consumers being "raped"?


RE: Ha
By 67STANG on 6/9/2008 1:53:04 PM , Rating: 2
Hypothetical A: Yes...do you really think they are going to go through all of the steps do instate this without the promise of a payoff?

Hypothetical B: Yes...they won't make less..users will still pay the same flat fee, they'll just pay additional money when they go over their limit.

They are simply trying to do what cellular companies are now moving away from: Unlimited Usage. This is a throwback to dialup ISP's that charged for monthly overages in usage.

Being "Raped" by AT&T (or any ISP that tries this) is signing up for an unlimited service (like all of their current customers have) and then having their plan modified so they can be nickeled and dimed.

Why repeat the past? Why not just call a spade, a spade? They are trying to stomp out file sharing users (without being criticized for traffic filtering) and are punishing everyone.


RE: Ha
By artemicion on 6/9/2008 4:59:03 PM , Rating: 4
Ok, let me start off by making it clear - I'm on the same side as you. I use a lot of bandwidth, so personally, I would prefer unlimited plans. But speaking of calling a spade a spade, I fully acknowledge what my spade is called: SELFISHNESS.

I don't want to pay more for internet. Bottom line. Plain and simple.

I don't claim that AT&T has to price one way or another.

I fully acknowledge that by fighting for what I want, I'm basically screwing over every 'lite' internet user who would pay less than what they are paying right now under a usage-based scheme. I fully acknowledge that those 'lite' users are subsidizing my internet use, I like it, and I want it to stay that way.

But I will not acknowledge that AT&T is doing anything wrong looking to switch to a usage-scheme. I'm not going to play dirty and accuse them of wrong doing.

Firstly, I think you're confusing issues. Yes, AT&T is a monopoly in some areas and their pricing practices should and probably are closely scrutinized by the relevant government agencies. However, the possibility of AT&T engaging in monopolistic pricing activity and AT&T changing its charging scheme to usage based are two separate issues. As my hypotheticals illustrates, they could very well be doing the latter without doing the former. *COULD* they be doing both? Yes, but I haven't seen any evidence of it YET.

Secondly, AT&T isn't trying to stomp out file users. If anything, after they start charging on a usage basis, they are going to actively encourage file sharing. I guess they are "stomping" them out in the sense that they are changing their business practices because of their activity. But let's say I open a buffet. Let's say I'm doing fine for awhile, but that Fatty McFatty moves into town and just eats everything in sight. So I look at my accounting reports and figure I'll make more money by switching to an a la carte scheme. I'm I "stomping him out"? I guess, in the sense that his activity made it more profitable to switch to a different scheme. I don't necessarily have anything against him, but you'd better believe that I'm out to do whatever it takes to maximize my profits. Am I well within my rights to do so? Damn straight. Am I doing anything "wrong" by doing so? Hell no. Is he gonna be pissed? Yup, just like you. Why? Because he's SELFISH and wants Skinny McSkinny to subsidize his meals.
They aren't "punishing" anybody with either payment scheme - skinny guys aren't punished by eating at the buffet, and fat guys aren't punished for eating a la carte.

So yes, let's call a spade a spade. Why do we want AT&T to stick exclusively with unlimited usage plans? Because we're selfish and we want other subscribers to subsidize our usage of the internet.


RE: Ha
By Reclaimer77 on 6/9/2008 5:07:13 PM , Rating: 2
quote:
, I would prefer unlimited plans. But speaking of calling a spade a spade, I fully acknowledge what my spade is called: SELFISHNESS.


Its not selfish to want what you pay for.

quote:
I don't want to pay more for internet. Bottom line. Plain and simple.


Who does ? We're already paying too much of a premium for the mediocre broadband we have now.

quote:
I fully acknowledge that by fighting for what I want, I'm basically screwing over every 'lite' internet user who would pay less than what they are paying right now under a usage-based scheme. I fully acknowledge that those 'lite' users are subsidizing my internet use, I like it, and I want it to stay that way.


Those lite users would never notice the supposed slowdown that your actions are causing in the first place though. Don't buy into this guilt trip tactic.


RE: Ha
By artemicion on 6/9/2008 5:39:13 PM , Rating: 3
Ah. Tactics. Ok. Let's talk tactics.

quote:
Its not selfish to want what you pay for.

This assertion is non-responsive to anything I said in my post. We're not talking about wanting what we pay for. We're talking about arguing between two different schemes for charging customers. Where scheme A charges Adam and Bob $5 each, and scheme B charges Adam $7 and Bob $3, I would say, yes it would be selfish for Adam to insist on scheme A, especially if Adam is using more of whatever he's buying.

quote:
Who does ? We're already paying too much of a premium for the mediocre broadband we have now.

Here, you chose to argue against something I put out there as an obviously true assertion in order to build toward an argumentative conclusion. I don't know why you singled out that particular part of my post. There was nothing controversial about it. But then you went on to attack two irrelevant issues: paying too much, and quality. Both are issues that are independent from the SCHEME chosen to charge for internet service unless you build an argument that one scheme or another will necessarily result in a further detriment in quality - which you didn't, and which I don't see as obvious enough to leave out. Paying too much I would argue is irrelevant because I don't think it is accurate to say one who pays for what one uses is paying "too much". Sure, the company can OVERALL overcharge all its customers, but again, that's an independent issue (charging by basis doesn't necessarily result in that conclusion). Perhaps your argument would be more clear if you clearly defined what is "too much".

quote:
Those lite users would never notice the supposed slowdown that your actions are causing in the first place though.

I'm not even sure what you're arguing here. By referencing "slowdown" are you making some kind of argument about quality of service? Again, that's irrelevant. Further it's irrelevant whether lite users "notice" anything. The bottom line is that supporting more bandwidth costs more money to provide, so using up more bandwidth drives up the cost of internet. I think lite users are well within their rights to want to pay less because they don't drive up cost as much. Or maybe you're trying to say since grandma doesn't know as much about computers as we do, she should be subsidizing our internet bill. Ouch.


RE: Ha
By Nyamekye on 6/9/2008 7:51:35 PM , Rating: 2
You're certainly a master at argument and discussion. But trying to persuade the other party with a long drawn out flame war is unnecessary - even if you are in the right.


RE: Ha
By Klober on 6/10/2008 3:45:11 PM , Rating: 2
I'd like to touch on 2 of the points you made. First:
quote:
We're not talking about wanting what we pay for.

I disagree. We actually are talking about wanting what we pay for - I pay for unlimited data transfer at 7Mbps/512Kbps and I believe I have a right to receive that since that's what I'm paying for.

Second:
quote:
Perhaps your argument would be more clear if you clearly defined what is "too much".

Well, to this comment I have quoted the following information from http://www.asahi-net.or.jp/~PF2K-WLKN/inetjfaq.htm... :
quote:
FTTH (Optical Fiber To The Home) is provided to large condos in major cities. A 1Gbps fiber typically connects to VDSL (very high speed ADSL), providing 100Mbps service to up to 8 or 16 users from about ¥4,500 a month. Non-shared connections (to houses or wooden apartments) start from about ¥7,000 a month. NTT B FLETS FTTH allows you to connect to two providers simultaneously if you wish. (FTTH setup fees are usually waived if you apply via your provider). (There are just under 8M FTTH users in Japan).

From http://www.oanda.com the currency conversion is ¥4,500 ~= $42.67 and ¥7,000 ~= $66.38. So, 1Gbps for ~$43-67/month. Compared to ~$35-40/month for 7Mbps? Yeah, I'd say "Who does ? We're already paying too much of a premium for the mediocre broadband we have now." is a pretty accurate statement - on both the "too much" and the "mediocre" fronts.

If needed I can find some pricing on South Korea and elsewhere, but I don't think they're going to help anyone arguing that what we're already paying is "reasonable", much less what is being proposed.


RE: Ha
By 67STANG on 6/9/2008 7:35:51 PM , Rating: 2
Sure they're doing something wrong. I don't know how much you comprehend business, but every business decision comes with the intension of raising the bottom line. Period.

You haven't seen them doing both yet, but you will. It plain to see by their intended actions...

Yes, they are trying to stomp out file sharing. How much file sharing do you think people will do once they start getting charged? My guess is that it will drop by AT LEAST 50-70%.

With how crumby our bandwidth is already compared to the rest of the developed world, for AT&T to try to pull Dial-Up pricing on their broadband customers is a shame.

Your analogy of the buffet doesn't work. There's no installation, food monopoly and also there's the fact that if you changed the buffet to a'la carte because of McFatty, you'd be sued and shut down by McFatty for discrimination.

By the way, I don't think having an unlimited broadband connection and expecting to pay X amount of dollars every month for it is selfish. Nor do I think my unlimited cell phone plan is selfish.


RE: Ha
By artemicion on 6/9/2008 8:54:06 PM , Rating: 4
quote:
Sure they're doing something wrong. I don't know how much you comprehend business, but every business decision comes with the intension of raising the bottom line. Period.

Going into business with the intention of raising the bottom line is "wrong"? What, pray tell, is the "right" reason for going into business?

quote:
Yes, they are trying to stomp out file sharing. How much file sharing do you think people will do once they start getting charged? My guess is that it will drop by AT LEAST 50-70%.

The only point I'm making here is that there's a distinction between AT&T's desire to lower bandwidth usage and the desire to "stomp out file sharing". AT&T doesn't care about file sharing (at least that's not their primary motivation for going usage-based). AT&T is not, and is not related to, the RIAA. They are only indirectly concerned with file sharing because there's a link between file sharing and bandwidth usage. I feel like tech sites say "file sharing" because it evokes the imagery of the evil RIAA in people's minds which is an unfair characterization of AT&T's business interests.

quote:
Your analogy of the buffet doesn't work. There's no installation, food monopoly and also there's the fact that if you changed the buffet to a'la carte because of McFatty, you'd be sued and shut down by McFatty for discrimination.

Tell me exactly why the analogy does not work because AT&T has a monopoly? I've already explained that one away but if you've got a counter-argument I'd like to hear it. Explain the relevance of "installation" too. Oh and while you're at it, tell me, what theory of tort would McFatty sue hypothetical me for changing a buffet to a la carte in order to realize greater profit? (Here's a hint: "discrimination" is not a tort.)

quote:
By the way, I don't think having an unlimited broadband connection and expecting to pay X amount of dollars every month for it is selfish. Nor do I think my unlimited cell phone plan is selfish.

I'm glad you brought up cell phone plans. Cell phone companies do NOT have a monopoly on cell phone service. So how are THEY distinct from the analogy to the buffet? Do you seriously want cell phone companies to ONLY offer unlimited plans? I don't understand why people assume that if this happened it would automatically be cheaper than what they're paying now. There is no cell phone monopoly so I think we can assume cell phone companies price as low as possible to stay competitive. Further, I think we can assume if everybody had an unlimited plan, overall usage will go up. And I think we can assume if overall usage will go up, cell phone companies are going to have to charge more in order to build a network that can withstand the additional strain. And I think, unless you use your phone more than the average person, you're going to end up paying more if everybody was forced to buy an unlimited plan.


RE: Ha
By pnyffeler on 6/9/2008 12:47:50 PM , Rating: 2
Another option is to simply cap uploads by users. Pirates & heavy Bit Torrent users put a huge strain on infrastructure because they're downloading & uploading all the time. If you cap uploads, you don't injure people who are doing "legitimate" things on the net, including email, web surfing, or downloading movies from iTunes.


RE: Ha
By harshbarj on 6/9/2008 1:21:01 PM , Rating: 5
What counts as "legitimate"? I create a lot of large video and audio file and upload them to my website nearly daily. All are owned by me and as such are legal for me to upload. I pay $60 a month for unlimited 13/1 (d/u) transfers and that is what I should get 24/7! I realize I’m not always going to get that speed but my ISP should never be the cause for slowdowns.


RE: Ha
By xRyanCat on 6/9/2008 1:25:57 PM , Rating: 2
Bit Torrent is used for many legitimate things. Capped uploads would kill Bit Torrent because Upload and Download speeds are directly proportional to each other. It would also kill people that do things like off-site backups, web site admins, etc.

The fact is, your ISP could care less if your using Bit Torrent for pirated material, they just don't want to any type of strain on their network.


RE: Ha
By StevoLincolnite on 6/9/2008 4:25:06 P