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AT&T's New iPhone Fees Forecast Smartphone Use

atandt iphone-4

AT&T's iPhone tariffs just got a big makeover ... or possibly a downgrade in performance, depending on how you look at it. The iPhone 4 is driving the changes, and it actually tells us a lot about how we'll use 4G smartphones.

AT&T's moves are designed to adjust their tariffs to better fit the profile of the average U.S. user on an iPhone. According to the network, some 65% of its users consume under 200MB per month and just a "fringe" 2% of data-hogs munch down over 2GB every 30 days. In response to this, AT&T's framing the new tariffs as a positive thing—they might save the majority of users some money, runs the argument. The counter-argument suggests that what AT&T is actually doing is working out how to squeeze more cash in total from its iPhone users, by landing those data hogs (some of whom go way over the 2GB limit) with really expensive bills. The motive may even be to tempt these folk into using the data system less than they do now, for fear of thousand dollar phone bills, so that there's less of a burden on the already frail AT&T network.

But which of these arguments makes sense?

GigaOM has a short piece today examining the reasons behind AT&T's thinking. The main thrust is that its the upcoming iPhone 4 that's really to blame thanks to the "full" internet in their pockets and the iPhone 4's new cameras. The rear camera takes 5-megapixel stills and immediate uploading photos to services like Flickr or Twitter's photo apps will become commonplace. Add 720p video and expect to see clips uploaded in huge number to Facebook or YouTube.

This is thanks to the iPhone 4's new cameras. The rear camera takes 5-megapixel stills, trouncing many user's pocket digital cameras not so much in terms of optical performance (though the unit does seem to take great photos) but because it's so much more convenient to have in your pocket. Since it's a device that's permanently connected to the Net, uploading photos to services like Flickr or Twitter's photo apps will be a common act. The fact it can shoot 720p video and edit it in-phone will also be a boon to many casual videographers, and their clips will surely end up online at Facebook or YouTube in ever-increasing numbers. Both these features will soak up valuable 3G data bandwidth.


Then there's that front-facing camera, and FaceTime video calling which Apple's execs have called "revolutionary." Of course, Europeans have had 3G video calling capabilities for years, but AT&T is likely terrified its grid will stumble under the load of all those late-night video booty calls. This man explain why initially, FaceTime is limited to Wi-Fi only.

Throw in the tweaks to the iOS software that'll drive every iPhone, including older ones, enabling tricks like multi-tasking always-on GPS checkins to services like Google Latitude, and the new Netflix app (which GigaOM has calculated will eat up 84% of the cheapest AT&T monthly data allowance in just one hour of viewing) and you've got a huge uptick in the data traffic AT&T'll be routing through the airwaves.

Making as much money as possible out of this trend is an obvious thing for a publicly owned company to aim for.

Meanwhile over at DesignByGravity, they've got a completely different counter-argument. While it's kinda understandable that AT&T's charging more for high-consumption data users, they argue it's a ridiculously short-termed bit of thinking. Instead of discouraging users from using lots of mobile data, with expensive fees, they should be actively encouraging it with attractive fee structures for higher data consumption.

Why? Because then users will use their smartphones for more and more things in day-to-day life (continuing the trend that's already underway), getting increasingly hooked into the usefulness of the devices. And then paying for lots of data access will actually seem like pretty good value for money. By pricing carefully from low to high data consumption, rather than pricing for the lowest common denominator like its new plans seem to, AT&T could actually make more money than it does now.

It's a shame, but AT&T's unlikely to make this sort of move, given its difficulty delivering futuristic tech in a futuristic business-thinking style— "tethering and MMS," anyone? But eventually, they'll probably will have to re-think some of their old money-grabbing provider ways. iPhone 4 use will be a forecast nearly all future 4G smartphones activity, with data-based consumption being the primary measure of use.

To keep up with this news follow me, Kit Eaton, on Twitter. That QR code on the left will take your smartphone to my Twitter feed too.

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  • Dave Kliman

    Kit, you do not even go into the ramifications of at&t's total failure here to give us the information infrastructure we need. instead of spending an extra dime to upgrade their network to something usable, they are doing what any monopoly with a captive audience would do... just raise prices, and forget about upgrading quality.

    This is how bell telephone operated, and it is how they managed to keep POTS (Plain old telephone service) pretty much exactly the same from the 1930's to the 1980's until the government finally had the guts to break them up. I might point out that when we finally did break them up, there was a telecommunications revolution, resulting in the appearance of hundreds of new phone companies, and all sorts of innovations. Also the quality went way up and the prices went way down. I can pretty much guarantee you that if they are allowed to do what they are doing, you have then seen the fastest the network will ever go. There will be no incentive for them to do anything to improve it. We cannot call the few remaining competitors they haven't yet bought, any kind of real competition, so i guess you should try to enjoy what might end up being the peak of our network technology.

    The fact is we are past the age where it makes sense for a huge greedy monopoly like at&t to have a broad fcc license to kill (our wallets) using what should be public airwaves.

    I say revoke their licenses and make that swath of spectrum public, so that anybody at any time, anywhere, can add interoperable antennae and really enhance the network, for the profit of all, instead of the profit of at&t.

    We need a national information infrastructure that is not connected to some monopoly who has only their own bottom line in mind.