Next week Apple is expected to announce a nifty new iPhone with true videophone support, so AT&T — for now Apple’s sole iPhone network provider in the USA — has preemptively imposed new smartphone data plans with a lower base price but also what appear to be restrictive caps on the total amount of data users can send and receive per month. While pundits like me are arguing whether this is better or worse for iPhone customers, the real AT&T strategy is being so far overlooked. It’s to get us all using smartphones, stupid.
The old iPhone plan gave unlimited data for a $30 monthly surcharge. The new data plans give users 200 megabytes per month for $15 or two gigabytes per month for $25. Going over your agreed limit in each case is expensive — $15 for another 200 megs for the entry plan whether you use the full extra 200 or not and $10 for each additional gig on the more expensive plan. To put this in perspective that extra gigabyte is enough to download one movie from iTunes over the AT&T 3G network, but to balance this AT&T is throwing-in free WiFi access at 20,000 hotspots for your movie downloading pleasure.
For most iPhone users the new plan will save a few bucks. AT&T claims 65 percent are under the 200 meg limit anyway so they’ll save $15 per month not to mention the free WiFi. Power users may well pay through the nose if they can’t force themselves to do big downloads at hotspots, but this generally involves less than five percent of iPhone users.
If not many people are going to be affected and AT&T’s revenue might actually go down as a result, what’s the point? They’re greedy, right? They want something from us. And that something is they want us all in a data plan and pronto.
Average revenue per mobile subscriber line is now falling for all U.S. carriers. There is too much competition, we’ve all got enough ringtones, and those $1,000 teenage texting bills have become a thing of the past. The only way the mobile carriers can get more money from us is to get us into data plans, which involve a surcharge — for now.
And that’s the point. A mobile phone has a life expectancy of 18 months. Two hardware generations from now — three years — all phones will be smartphones. But the risk in this natural evolution for the carriers is that those smartphones will come without associated data plans and their extra revenue. So AT&T (soon to be followed by Verizon) wants to lock us in to a particular revenue model. They want to force an unnatural evolution by selling us data plans while they still can and then keeping us on those data plans past the point where they’ll make sense.
Network capacity is an issue here, but not the major one.
The endgame is all-IP everywhere with no particular differentiation between data types. But until that happens, AT&T wants to get some extra scratch from us for something that — like long-distance is now — they’ll eventually be giving away for free.