AT&T CEO bemoans iPhone unlimited data, iMessage

Posted:
in iPhone edited January 2014
AT&T chief Randall Stephenson wishes the company had never offered unlimited data plans with the original iPhone and worries about the impact free texting services like Apple's iMessage will have on the telecom's bottom line.

At the Milken Institute?s Global Conference on Wednesday, Stephenson expressed his discontent over AT&T's decision to to offer unlimited data plans when the first iPhone was launched in 2007, reports The New York Times.

?My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat," Stephenson said. "?And it?s a variable cost model. Every additional megabyte you use in this network, I have to invest capital.?

Stephenson, who took the reigns as CEO in the same year Apple's iPhone debuted as an AT&T-exclusive device, alluded that profits would have been healthier if the company opted for a different pricing model. AT&T ended unlimited data for the iPhone in 2010 and moved to a tiered model that helped the carrier reach $6.1 billion in revenue last quarter from data users alone.

It should be noted that customers who signed up for the original unlimited data plans were grandfathered in after the tiered pricing model was established. The opportunity came with the caveat that a user is not allowed to flip-flop between plans, that is they can't downgrade to tiered plan and move back up to unlimited. In March, AT&T instituted further restrictions to remaining all-you-can-eat data customers, however, and announced that it would be throttling data speeds when a user passes a 3GB threshold.

Randall Stephenson
AT&T CEO Randall Stephenson. | Source: AT&T


In addition to unlimited data concerns, Stephenson said that he is worried about other data-centric services taking over current AT&T offerings.

?You lie awake at night worrying about what is that which will disrupt your business model,? Stephenson said. ?Apple iMessage is a classic example. If you?re using iMessage, you?re not using one of our messaging services, right? That?s disruptive to our messaging revenue stream.?

Instead of using a subscription-based SMS, which is basically free for carriers to operate as texts are transmitted through radio network's control channel, iMessage let's iOS users send messages using wireless data. Apple launched the service alongside iOS 5 in 2011. The wireless market has seen an increase in text packaging as evidenced by AT&T's move to one $20 per month unlimited messaging option, though it remains unclear if the change was in direct response to data-based solutions.

Stephenson also cited VoIP solution Skype as another threat, this time to his company's voice plans.

Despite his consternation, the CEO ultimately revealed that he doesn't regret supporting the iPhone which accounted for 78 percent of AT&T's smartphone activations in the first quarter of 2012.

During the interview Stephenson discussed the initial conversations Apple co-founder Steve Jobs had with Cingular Wireless, which later became AT&T, over the proposed iPhone. He said that the board was worried the device would cause a shift in the carrier's business model.

?I remember asking the question: Are we investing in a business model, are we investing in a product or are we investing in Steve Jobs?? Stephenson said. ?The answer to the question was, you?re investing in Steve Jobs. Let?s go after this thing. And we went after it, and the rest is history.?
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Comments

  • Reply 1 of 125
    tallest skiltallest skil Posts: 43,388member


    1. Your texts cost you $0.00.000000000000000000000000000000000000000000000000000000000000000 to send. You charge us $20 for a couple hundred. Screw you.


     


    2. Yeah, unlimited data was a mistake; you're either too stupid or too inept to build out your network properly to meet the demand of modern society. Look at Japan. They're proof that it's possible and you're lying.

  • Reply 2 of 125
    shadowxprshadowxpr Posts: 162member
    1. Your texts cost you $0.00.000000000000000000000000000000000000000000000000000000000000000 to send. You charge us $20 for a couple hundred. Screw you.

    2. Yeah, unlimited data was a mistake; you're either too stupid or too inept to build out your network properly to meet the demand of modern society. Look at Japan. They're proof that it's possible and you're lying.

    Completely agree with you text messaging plans have been a robery for years. Now they want to do the same on data apps. I hope congress makes data caps ileagal on wired and wireless networks. Charge for the speed but no caps, theinternetis a utility...
  • Reply 3 of 125
    ivladivlad Posts: 742member


    Completely agree, but you can't really compare Japan's size and population to the whole United States. It's much easier in Japan.

  • Reply 4 of 125
    crimguycrimguy Posts: 124member


    Call the Waaaaaambulance.


     


    Wonder how AT&T's bottom line would have been over the past 5 years without the iPhone.  IIRC they were getting throttled by Verizon, and customer satisfaction was in the toilet.

  • Reply 5 of 125
    suddenly newtonsuddenly newton Posts: 13,819member

    Quote:

    Originally Posted by Tallest Skil View Post


    1. Your texts cost you $0.00.000000000000000000000000000000000000000000000000000000000000000 to send. You charge us $20 for a couple hundred. Screw you.


     


    2. Yeah, unlimited data was a mistake; you're either too stupid or too inept to build out your network properly to meet the demand of modern society. Look at Japan. They're proof that it's possible and you're lying.



     


    Have a heart. Stephenson can't afford to pay his domestic help for a second-shift because you're cheating AT&T on profits with abusive data use. Now if he wants a midnight snack, he has to go downstairs and fix it himself. I guess they're used to stacking the deck against their customers.

  • Reply 6 of 125
    johndoe98johndoe98 Posts: 278member


    Where is TalkTime already? C-mon Apple, enable tethering, facetime on cell network, and roll out Talktime! Ya you lose carrier subsidies, but who cares!

  • Reply 7 of 125
    capnbobcapnbob Posts: 388member


    In the words of Ella Fitzgerald and Justin Timberlake... "cry me a river"


     


    I along with many other (but a dwindling number of) early adopters have unlimited data and don't ever abuse the bandwidth. We pay $30 to use whatever amount, others pay $25 to use the same amount (below 2GB). AT&T makes $5 more on us which is the vast majority of users.


    The texting thing is chickens coming home to roost (as many others have said). Not since the Vikings has a more egregious policy of rape and pillage been mounted as in mobile telco txt pricing.


    Especially now with the loss of the low-text plans.

     

  • Reply 8 of 125
    kent909kent909 Posts: 731member


    The best I can tell the Milken conference is where all the people who screwed the economy get together and try to figure out how to fix it. After hearing this guy speak I don't hold much hope for the economy getting fixed. I fear they may have given up on the economy in general and are focused on how to maintain their personal fortunes. $31.8B in sales and $3.6B in profit. last quarter for AT&T. 

  • Reply 9 of 125
    christophbchristophb Posts: 1,482member

    Quote:

    Originally Posted by Tallest Skil View Post


    2. Yeah, unlimited data was a mistake; you're either too stupid or too inept to build out your network properly to meet the demand of modern society. Look at Japan. They're proof that it's possible and you're lying.



     


    Yes, because providing coverage in Japan and providing it in the non-contiguous 50 US states is the same thing.  Japan is roughly the size of California with not nearly the population density.  


     


    Here's a piece of advice from the internet - be slower to call people stupid and/or inept.

  • Reply 10 of 125
    tallest skiltallest skil Posts: 43,388member

    Quote:

    Originally Posted by iVlad View Post

    Completely agree, but you can't really compare Japan's size and population to the whole United States. It's much easier in Japan.


     


    So then they send representatives to Japan and South Korea (and Finland and Sweden) to learn how to build these networks. And then they come back and scale it up.




    We're Americans. We're incredible at this sort of thing. It's the last few decades that these idiots (not just the telecoms) have become complacent and lazy.


     


    Quote:

    Originally Posted by johndoe98 View Post

    Where is TalkTime already? C-mon Apple, enable tethering, facetime on cell network, and roll out Talktime! Ya you lose carrier subsidies, but who cares!


     


    It may be on Apple to enable, but it's not their call to enable it.

  • Reply 11 of 125
    spiralspiral Posts: 16member

    Quote:

    Originally Posted by Crimguy View Post


    Call the Waaaaaambulance.


     


    Wonder how AT&T's bottom line would have been over the past 5 years without the iPhone.  IIRC they were getting throttled by Verizon, and customer satisfaction was in the toilet.



     


    OMG my exact feelings. I love hearing the telecom companies simultaneously complain about having iPhone service (AT&T) and not having iPhone service (T-Mobile). I bemoan ever having to use AT&T. T-Mobile was much nicer to me, cheaper, and actually worked everywhere. 

  • Reply 12 of 125
    SpamSandwichSpamSandwich Posts: 33,407member
    shadowxpr wrote: »
    Completely agree with you text messaging plans have been a robery for years. Now they want to do the same on data apps. I hope congress makes data caps ileagal on wired and wireless networks. Charge for the speed but no caps, theinternetis a utility...

    You want the government that no one can or should trust to get even MORE involved? What?

    If anything, regulations need to be eliminated so competition can become more fierce between these companies.
  • Reply 13 of 125
    johndoe98johndoe98 Posts: 278member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    It may be on Apple to enable, but it's not their call to enable it.



    Care to explain? You aren't making much sense to me. If Apple enables tethering, FaceTime, and implements a TalkTime, what exactly can AT&T do that won't involve antitrust and anticompetitive suits to follow shortly? FaceTime and TalkTime would be Skype competitors. AT&T can't just start blocking Skype at will. As for tethering, same deal. If a company decides to roll out a tethering App in the App Store and sell you the feature for 5$, AT&T can't now claim that interferes with their 20$ a month tethering plan. Simply won't fly. Remember what happened when Google Voice was being blocked in the App Store? The FTC quickly stepped in and demanded an explanation from AT&T and Apple.

  • Reply 14 of 125
    leoofborgleoofborg Posts: 4member


    It's also NO SURPRISE that he's spouting this at the Milken Institute. Anyone remember Mike Milken? The "King of Junk Bonds?"


     


    http://en.wikipedia.org/wiki/Michael_Milken


     


    It's just like MBAs like Stephenson to "moan" in a safe environment.. and not, say at an AT&T shareholder meeting.

  • Reply 15 of 125
    poochpooch Posts: 768member


    (a)  there's never been unlimited data and there isn't now.


     


    (b)  your business model of say anything to get the customer then screwing them over (aka market-first-react-later) is your own fault.


     


    (c)  boo-effing-hoo, you already make 12-13 Billion a year in net profit.


     


    at&t management long ago destroyed what little goodwill i had toward the company.

  • Reply 16 of 125
    gtrgtr Posts: 3,231member
    My message to AT&T:

    LO&L
  • Reply 17 of 125
    tallest skiltallest skil Posts: 43,388member

    Quote:

    Originally Posted by johndoe98 View Post

    Care to explain? You aren't making much sense to me. If Apple enables tethering, FaceTime, and implements a TalkTime, what exactly can AT&T do that won't involve antitrust and anticompetitive suits to follow shortly? FaceTime and TalkTime would be Skype competitors. AT&T can't just start blocking Skype at will.


     


    Well, FaceTime works on 3G in other countries (Saudi Arabia is one, I believe). Apple is the one that enables it, but the telecoms are the ones that approve it. And heck yes, they'll just block Skype. Don't think they won't.


     




    Quote:

    Originally Posted by Pooch View Post

    (a)  there's never been unlimited data and there isn't now.



     


    2007, 8, and 9 called.


     


    … The call dropped because it was on AT&T, but I heard, "Tel… …ooch that we ha… …imited data and w… 'on't know w… …alking about."

  • Reply 18 of 125
    johndoe98johndoe98 Posts: 278member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Well, FaceTime works on 3G in other countries (Saudi Arabia is one, I believe). Apple is the one that enables it, but the telecoms are the ones that approve it. And heck yes, they'll just block Skype. Don't think they won't.



    The carriers cannot approve and disapprove anything they want. They can certainly try, but the US is a nation of laws and the carriers have to abide by those laws.

  • Reply 19 of 125
    jeffdmjeffdm Posts: 12,951member


    This just in: "sending email takes away from the money we could be making on texts."  I really don't think the alleged losses flies because AT&T got rid of their $5 and $10 text plans in favor of $20/mo plan or paying dearly for each trivial text.


     


     


    Quote:

    Originally Posted by johndoe98 View Post


    Care to explain? You aren't making much sense to me. If Apple enables tethering, FaceTime, and implements a TalkTime, what exactly can AT&T do that won't involve antitrust and anticompetitive suits to follow shortly? FaceTime and TalkTime would be Skype competitors. AT&T can't just start blocking Skype at will. As for tethering, same deal. If a company decides to roll out a tethering App in the App Store and sell you the feature for 5$, AT&T can't now claim that interferes with their 20$ a month tethering plan. Simply won't fly. Remember what happened when Google Voice was being blocked in the App Store? The FTC quickly stepped in and demanded an explanation from AT&T and Apple.



     


    AT&T and Apple have a contract.  Last I heard, Apple gets a very considerable amount of money per device, including a monthly fee.  AT&T then has some say in what they allow Apple to enable in exchange for the subsidy.

  • Reply 20 of 125
    jeffdmjeffdm Posts: 12,951member

    Quote:

    Originally Posted by johndoe98 View Post


    The carriers cannot approve and disapprove anything they want. They can certainly try, but the US is a nation of laws and the carriers have to abide by those laws.



     


    What law is AT&T violating by disallowing 3G FaceTime use?


     


    Not that I like it, but to imply that it's illegal, I think that claim needs to be supported.  A concept such as net neutrality doesn't apply to wireless carriers.

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