As most of you have probably seen, Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets eluded this week that his company is considering a tiered pricing model for data. Most people have been up in arms about this, saying that it's just a way for AT&T to not only squeeze more money out of its customers, but better cope with the fact that its network can't handle all the traffic that comes from the iPhone.
I'll say: "Ya...So what?"
If I put on my economics hat (I do on occasion need to remind myself that I have a Master's degree in the dark science), this is a classic case of Supply and Demand. SSDD in econ parlance.
There was another article recently that said the 40% of AT&T's data traffic was consumed by only 3% of customers. How much you want to bet that many of those 3% are using an iPhone? I'm not a "heavy" user of the iPhone and I still use about 400 MB a month. Continuing the economics parlance, there is a cross subsidization from those who use little data to those who are using a lot of data. This is not equitable in the long run.
So what are we to do? First of all, I do NOT believe there should be caps on the amount of data you can consume, e.g: only 1GB a month, or whatever. Instead, you can actually achieve the same goal from a completely different approach. Throttle back the speed. Does EVERYONE need 3G? My family sure doesn't. They just do email and surf the web occasionally. Do I need 3G? Heck, I need 4G. I need access NOW...and for that, I would pay a premium.
The mobile network operators have much to learn from tradtional ISPs in my opinion. I pay extra to have 30 Mbps on my cable modem as opposed to my friend who has a 1 Mbps DSL line. It's impossible for him to use as much network resources as me, because his pipe is 1/30th the diameter of mine. See how this works? I choose to be less constrained, and I am willing to pay the price.
Supply / Demand. SSDD.
Why is this so hard for the carriers to understand?
