The wireless industry may ditch unlimited plans in favor of data caps and tiered pricing, though such a move is probably years away. In the meantime, service providers are struggling to balance the consumption they encouraged, which is putting new strains on their networks, with the needs of customers who increasingly rely on their smart phones.
AT&T is the most prominent example of this dilemma, thanks to the popularity of Apple's iPhone and the App Store, where customers can load their devices with programs that deliver a local weather forecast or stream an Internet radio station. The iPhone has helped AT&T increase its average revenue per user and reduce the rate of customer defection to competitors. But the carrier also is working to bulk up its network in New York City and San Francisco, which have experienced sub-par network performance with the iPhone's proliferation.
"We all knew as an industry that mobile data would grow, and we saw these growth curves that were a 45-degree angle upward," said James Brehm, senior consultant at Frost & Sullivan. "But the true growth of the iPhone, when you chart it, looks more like a hockey stick."
Ralph de la Vega, chief executive of AT&T Mobility and Consumer Markets, caused a stir at an investment bank conference last week when he said the company is seeking ways to curb high usage by data hogs — namely, iPhone users. The executive said 3 percent of iPhone users account for 40 percent of traffic.
"If 3 (percent) are costing 40 percent, then we're going to focus on making sure we give incentives to those small percentages to either reduce or modify their usage, so they don't crowd out the other customers in the same cell sites," de la Vega said. For the longer term, he said, AT&T might consider "some sort of pricing scheme that addresses the usage."
De la Vega said any new pricing would comply with Federal Communications Commission regulations on Internet neutrality, or ensuring that applications and content are treated equally. Internet service providers have faced government scrutiny and consumer ire in previous attempts to limit heavy data usage.
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