AT&T Learns Exactly The Wrong Thing About Data Usage
AT&T says that 65% of its users use less 200 megabytes per month; a whopping 98% use less than 2 gigabytes. (NYT) AT&T looked at these numbers and concluded it was time for tiered pricing; time to soak these “data pigs”. — I am a data pig.
Context & Ripple Effects
AT&T arrives at tiered pricing with its customer relations already fraying: back in December 2009 a campaign urged iPhone users to take down AT&T over service quality, and by late May 2010 the carrier was still absorbing backlash from iPhone-hungry customers while its exclusivity held. The company has been propping up that experience with hardware economics — handsets sold below full retail against two-year agreements — and a nationwide 3G MicroCell rollout to patch coverage gaps.
Against that backdrop, the numbers AT&T disclosed to the NYT read differently depending on who interprets them: 65% of users under 200MB a month and 98% under 2GB. Management concluded the distribution justified tiered pricing aimed at 'data pigs'; the Design By Gravity author, self-identifying as one, argues the same figures show how few customers actually stress the network — meaning the heavy minority is being billed rather than the congestion solved.
First-order effects
- AT&T's heaviest-usage iPhone customers lose flat-rate predictability and face overage exposure under the new tiers, even though they sit in the 2% tail the carrier itself says strains its network.
- Enterprise buyers are caught too: with Ron Spears reporting four in ten iPhone sales going to business customers, metered data turns every corporate deployment into a variable cost that procurement now has to forecast.
Second-order effects
- Tiered pricing stacks onto an already hostile base — the December protest and the May 2010 service complaints — giving restless iPhone owners a second grievance precisely while exclusivity still locks them to AT&T.
- Subsidized-handset-plus-two-year-contract economics now pairs with metered usage, shifting the carrier's revenue mix from flat monthly fees toward overage capture as app-driven consumption grows.
Third-order effects
- If smartphone usage keeps climbing, the 200MB and 2GB boundaries that comfortably contain 98% of users today become ordinary territory, converting what AT&T frames as a heavy-user surcharge into a broad repricing of mobile data.
- The episode sets a template for the industry: reading congestion statistics as a pricing opportunity rather than a capacity investment signal, which would push usage-based billing from exception toward default across U.S. carriers.
The trend: U.S. wireless carriers are pivoting from all-you-can-eat data plans toward metered, tiered pricing as smartphone adoption concentrates traffic in a growing minority of heavy users.