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AT&T planning to let developers pay for users' smartphone data usage

post #1 of 67
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AT&T has revealed that it is working on a system that would allow mobile software developers to pay for users' bandwidth use, in an approach likened to toll-free calling.

John Donovan, AT&T senior executive vice president of technology and network operations, said in an interview with The Wall Street Journal that his company is exploring ways to make money from increased data use on their networks, while also avoiding price hikes that could draw the ire of subscribers. Donovan likened the proposed system to the use of 800 numbers for free calls.

"(It) would say, if you take this app, this app will come without any network usage," Donovan reportedly said while at this week's Mobile World Congress in Barcelona.

AT&T executives believe the system could be a win for both consumers and the carrier itself, allowing third parties to shoulder some of the costs of mobile bandwidth.

He gave the example of a user who wants to download a movie on the go, but who has nearly reached their monthly data plan cap. The content provider selling the movie could cover the cost of the bandwidth needed to download the film, so that the user could still make the purchase and not go over their limit.




AT&T began capping smartphone data plans in June of 2010, just before the launch of the iPhone 4. Previously, iPhone owners were offered unlimited data for $30 per month. Its chief competitor, Verizon, also has capped data plans with a tiered pricing structure.

Last year, AT&T also began throttling the mobile data speeds of its heaviest users. In the U.S., Sprint is the only official nationwide iPhone carrier that does not cap or throttle mobile data usage.

[ View article on AppleInsider ]
post #2 of 67
What a really stupid idea!

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post #3 of 67
"AT&T executives believe the system could be a win for both consumers and the carrier itself, allowing third parties to shoulder some of the costs of mobile bandwidth."

What about the win for the developer? Without that, the whole scenario won't work.

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post #4 of 67
Quote:
Originally Posted by jd_in_sb View Post

"AT&T executives believe the system could be a win for both consumers and the carrier itself, allowing third parties to shoulder some of the costs of mobile bandwidth."

What about the win for the developer? Without that, the whole scenario won't work.

Yep, I can see it now: "This app is not available on AT&T in the U.S."
post #5 of 67
I didn't think there was any bandwidth left and that was the reason for throttling everyone over 2gb? seems they wanted to herd everyone into lower data usage and sell the excess, in essence selling the same data twice.
post #6 of 67
Quote:
Originally Posted by hittrj01 View Post

Yep, I can see it now: "This app is not available on AT&T in the U.S."

Unless you have the unlimited data plan.

Oh no, wait...
post #7 of 67
Quote:
Originally Posted by satcomer View Post

What a really stupid idea!

It's actually a clever idea. Not that it's going to replace conventional apps or that everyone would use it, but I could picture some scenarios where an app developer would want to pay for bandwidth and include it in the cost of the app.
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post #8 of 67
The example given was a movie download. The win for whoever sells the movie, is that they'll sell more movies. The price of the bandwidth would be built into the price of the movie. Presumably the developer or whoever will be buying data wholesale and won't be paying $15/gb or whatever AT&T charges. A similar system could work for in-app purchases, the developer sells more in-app add-ons and part of the price is for bandwidth. It's another option, I don't see why this is a bad idea if a developer WANTS to offer it.
post #9 of 67
AT&T wouldn't be REQUIRING developers to do this, they would let them have the option to add this feature. Imagine Netflix offering an in-app purchase allowing you to stream unlimited movies without going against your data allotment for a few dollars a month. I can also see Verizon getting in on this as well. To be able to implement this AT&T would have to be working with Apple to implement the system. I can imagine Verizon jumping on the bandwagon if it is successful.
post #10 of 67
Quote:
Originally Posted by hittrj01 View Post

Yep, I can see it now: "This app is not available on AT&T in the U.S."

Or... this app (movie?) is available on AT&T for $4.99 w/o data charge or $14.97 w/ data charges.

Does AT&T really think the content developers are going pay the data usage to AT&T without passing it on to the consumer? You are right that content will not be available to AT&T. If AT&T thinks it can make more money on data than they already are, their bonkers!
post #11 of 67
Quote:
Originally Posted by Macaddict16 View Post

AT&T wouldn't be REQUIRING developers to do this, they would let them have the option to add this feature. Imagine Netflix offering an in-app purchase allowing you to stream unlimited movies without going against your data allotment for a few dollars a month. I can also see Verizon getting in on this as well. To be able to implement this AT&T would have to be working with Apple to implement the system. I can imagine Verizon jumping on the bandwagon if it is successful.

If ATT can sell that Data to those companies at a cheap price, why can't it offer that same amount of Data to its consumers at the same price? So, let's say they charge netflix 1$ for movie, well, that means they could give you 1gb for 1$...
post #12 of 67
Quote:
Originally Posted by dancxg View Post

I didn't think there was any bandwidth left and that was the reason for throttling everyone over 2gb? seems they wanted to herd everyone into lower data usage and sell the excess, in essence selling the same data twice.

Agreed, but perhaps there is one up spin to all this. It controls what the Data is being used for, so you can't use the Data towards illegal ends, other than in your plan directly with ATT which they ensure is so low you can only do minimal amounts of piracy.

At the end of the day, for everyone using the data legally, there can only be one reason why ATT wants this. They figure they can charge more, on total, for their Data, which is going to be bad for the consumers since the costs will be passed off to them. The developers sure are not going to willingly take less of a cut.
post #13 of 67
I could see this being a temptation for my ipad -- I have a cellular chip, but usually don't use the connection -- if ATT would let me use it only for apps that pay for it, then I would consider using them.

imagine -- paying $0.50 for a mail app that used the cellular connection without having to pay for the cellular connection.

not that I imagine ATT letting that happen in a million years...
post #14 of 67
Quote:
Originally Posted by Macaddict16 View Post

AT&T wouldn't be REQUIRING developers to do this, they would let them have the option to add this feature. Imagine Netflix offering an in-app purchase allowing you to stream unlimited movies without going against your data allotment for a few dollars a month. I can also see Verizon getting in on this as well. To be able to implement this AT&T would have to be working with Apple to implement the system. I can imagine Verizon jumping on the bandwagon if it is successful.

So the consumer is paying twice for the data usage built into this content. They already are paying for the data in a data plan. Why would the consumer buy a higher price app//movie/content?

This is a fail. Any developer who did this would lose sales even at wholesale data prices.

AND if AT&T can give cheap wholesale prices to the content provide, why are they charging us so much for the same data? The AT&T customers will revolt!
post #15 of 67
Quote:
Originally Posted by johndoe98 View Post

If ATT can sell that Data to those companies at a cheap price, why can't it offer that same amount of Data to its consumers at the same price? So, let's say they charge netflix 1$ for movie, well, that means they could give you 1gb for 1$...

That is like asking why (au prices) an SMS of 160 ASCII characters costs 25c, or perhaps it would make more sense if I said it as $500/mb. That is what carriers charge for data if it is an SMS. Voice packets, price them per meg.

Carriers aren't charging you $x for a gig cause they have to. It is because it is all the market will pay. So SMS came out pre smart phone, we now accept the bizarre price of it, but mobile data came after landline data. In the consumers mind they think it must cost more to do that mobile and accept the price.

Not that a tower is free BUT as far as install costs go, you'd have to say digging a long hole and putting cables in it for back haul from the tower (landline) costs a pretty packet
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post #16 of 67
Quote:
Originally Posted by ljocampo View Post

So the consumer is paying twice for the data usage built into this content. They already are paying for the data in a data plan. Why would the consumer buy a higher price app//movie/content?

This is a fail. Any developer who did this would lose sales even at wholesale data prices.

AND if AT&T can give cheap wholesale prices to the content provide, why are they charging us so much for the same data? The AT&T customers will revolt!

You don't necessarily have to pay twice, it would be like Amazon and books. Don't they have an agreement with ATT where you can download the books free? No contract needed? In other words, when you use those apps, your contract data won't be affected.
post #17 of 67
So AT&T wants to hire the app developers as resellers of their bandwidth? That's one way to do away with net neutrality.
post #18 of 67
Quote:
Originally Posted by cy_starkman View Post

That is like asking why (au prices) an SMS of 160 ASCII characters costs 25c, or perhaps it would make more sense if I said it as $500/mb. That is what carriers charge for data if it is an SMS. Voice packets, price them per meg.

Carriers aren't charging you $x for a gig cause they have to. It is because it is all the market will pay. So SMS came out pre smart phone, we now accept the bizarre price of it, but mobile data came after landline data. In the consumers mind they think it must cost more to do that mobile and accept the price.

Not that a tower is free BUT as far as install costs go, you'd have to say digging a long hole and putting cables in it for back haul from the tower (landline) costs a pretty packet

I don't understand what you are going on about. So let me make it clearer for you.

If ATT charges Netflix x dollars per movie, and those Netflix movie are y big in terms of data, then there seems to be no reason that ATT couldn't charge you x dollars for z data, where y = z. There is no need for adding a middle man here other than to apparently increase the costs, overall, on data consumption.

Right now ATT isn't having a problem selling all their data, in fact they are complaining they are running out. They are just looking to charge more for that same data. That's why they are coming up with these ideas to introduce more complexity into the chain. The purpose of this obfuscation is clear. ATT doesn't want users to realise just how much they are paying for their data. When they deal with the consumer directly, the consumers knows the final price. When they add in middle-men, the costs become opaque and the consumer doesn't know who to blame, ATT or the middle-man.
post #19 of 67
Quote:
Originally Posted by johndoe98 View Post

...They are just looking to charge more for that same data. That's why they are coming up with these ideas to introduce more complexity into the chain.

Bingo!
post #20 of 67
Unlimited should be unlimited. This is a joke. If the app developer has to pay, so end user will have to pay. I am glad I switched to Verizon when I could still get unlimited data. AT&T treats their customers like crap.
post #21 of 67
Another exception would be if they introduce advertisers into the mix. Somebody like Hulu or YouTube could offer unlimited viewing of shows that would not impact your data quota, and the whole thing would be sponsored by advertising.

I imagine there are also other circumstances where the app provider stands to make money by the user spending time with their app, but wants to subsidize the data fees to encourage the user to spend as much time as possible with the app. A movie trailer site could be another example, where the film distributors pay the data fees so people will see lots of trailers and hopefully go see some movies later.
post #22 of 67
I foresee a power struggle with Apple and at&t. We know who would have won in the SJ days. This will be a good test for Mr. Cook.

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post #23 of 67
They are taking a page from how lawyers tried to bill, charging each of 10 clients in one location for the airfare and flight time to the same destination. Absolutely dishonest but no surprise with ATT.
post #24 of 67
Sounds like they want to do the same thing the Kindle does (i THINK Amazon partners with VZ in the U.S., though I'm not certain.)
The Kindles use 3G for Amazon purchases, but the user doesn't pay for it directly. (no cellular account.)
Sure, the price of that bandwidth is included in the price of the Kindle... but the same idea. While it works great with the Kindle... I can just imagine the headaches when you have hundred(s) of apps, each with their own, optional, data allotment... but all through the same cellular number that you also use for your personal account.
... no... there won't be any incorrect bills issued to the consumers in the first couple years of THAT system!!!
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post #25 of 67
Quote:
Originally Posted by johndoe98 View Post

You don't necessarily have to pay twice, it would be like Amazon and books. Don't they have an agreement with ATT where you can download the books free? No contract needed? In other words, when you use those apps, your contract data won't be affected.

Great example. I could picture someone who wouldn't have a data plan at all, but who would gain access to books or movies via this system.

Quote:
Originally Posted by johndoe98 View Post

I don't understand what you are going on about. So let me make it clearer for you.

If ATT charges Netflix x dollars per movie, and those Netflix movie are y big in terms of data, then there seems to be no reason that ATT couldn't charge you x dollars for z data, where y = z. There is no need for adding a middle man here other than to apparently increase the costs, overall, on data consumption.

I guess no one has explained to you the idea of a quantity discount. If you buy a bag of sugar in the grocery store, it's $3.08 (at Walmart) for a 5 pound bag or $0.61 per pound.

If you're buying it in truckloads, it's under $0.25 per pound.

There's no reason to think that big data buyers don't get a discount, as well.

Quote:
Originally Posted by Retrogusto View Post

Another exception would be if they introduce advertisers into the mix. Somebody like Hulu or YouTube could offer unlimited viewing of shows that would not impact your data quota, and the whole thing would be sponsored by advertising.

I imagine there are also other circumstances where the app provider stands to make money by the user spending time with their app, but wants to subsidize the data fees to encourage the user to spend as much time as possible with the app. A movie trailer site could be another example, where the film distributors pay the data fees so people will see lots of trailers and hopefully go see some movies later.

That's another possibility. I'm not sure the economics work out for the developer, but if they do, this would be a good opportunity to shift some of the cost away from the consumer onto the advertisers.
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post #26 of 67
advertisers should pay users for bandwidth.
post #27 of 67
Quote:
Originally Posted by dancxg View Post

I didn't think there was any bandwidth left and that was the reason for throttling everyone over 2gb? seems they wanted to herd everyone into lower data usage and sell the excess, in essence selling the same data twice.

Well, now you see how honest AT&T is.
post #28 of 67
and the developers would then pass the charge back onto consumers , in which case you would then have apps,software and media having different charges based on what carrier your affiliated with.
have a contract with att you will be paying more then you would with verizon , for apps , media and software
post #29 of 67
Quote:
Originally Posted by jragosta View Post

Great example. I could picture someone who wouldn't have a data plan at all, but who would gain access to books or movies via this system.



I guess no one has explained to you the idea of a quantity discount. If you buy a bag of sugar in the grocery store, it's $3.08 (at Walmart) for a 5 pound bag or $0.61 per pound.

If you're buying it in truckloads, it's under $0.25 per pound.

There's no reason to think that big data buyers don't get a discount, as well.

And I guess no one explained to you the concept of supply and demand. If your supply is limited and it will all get demanded, and cannot be replenished any faster, or sold any faster, there is no reason whatsoever to offer bundled discounts. Why do you think Apple never gives discounts, even to its biggest distributors, like Best Buy?

ATT's bandwidth is limited, and if you believe what they tell us, tapped out.
post #30 of 67
Quote:
Originally Posted by johndoe98 View Post

And I guess no one explained to you the concept of supply and demand. If your supply is limited and it will all get demanded, and cannot be replenished any faster, or sold any faster, there is no reason whatsoever to offer bundled discounts. Why do you think Apple never gives discounts, even to its biggest distributors, like Best Buy?

ATT's bandwidth is limited, and if you believe what they tell us, tapped out.

You are absolutely, totally wrong.

Even when a product is limited in supply (within reason), high volume purchasers often get a discount. Aside from normal volume purchasing decisions, it's less expensive for AT&T to handle one billion bit customer than a thousand megabit customers.

Furthermore, where did AT&T say that supply was tapped out? They said that they were capping a small percentage of people who used to most data to preserve the experience for everyone else, but that doesn't say that they don't have excess capacity.
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post #31 of 67
These AT&T parasites will do anything to promise one set of specs, deliver far less, raise the price on everything they offer in their static network, and openly lie that everything they told you is fact...

Sure am glad I AM NOT AND WILL NEVER BE an AT&T customer...
post #32 of 67
Quote:
Originally Posted by williamh View Post

The example given was a movie download. The win for whoever sells the movie, is that they'll sell more movies. The price of the bandwidth would be built into the price of the movie. Presumably the developer or whoever will be buying data wholesale and won't be paying $15/gb or whatever AT&T charges. A similar system could work for in-app purchases, the developer sells more in-app add-ons and part of the price is for bandwidth. It's another option, I don't see why this is a bad idea if a developer WANTS to offer it.

They'd need to get a fixed cost for the bandwidth first. Paying "customer-end" prices like developers have to do for Amazon is just going to limit it to text-only eBook's.

Looking through files on my hard drive, a 30 minute 720p video is 350 to 500MB. A "2GB cap" is exhausted after a single movie. 10$ per 1GB. Now take a look at Zune, iTunes, etc for how much it costs to buy or rent a single episode or movie (hint, 5$.) So 15$ in data to watch a 5$ movie... that's more expensive than a trip to the theater.

So AT&T is either is seeing dollar signs in their eyes as all their potential users pay more for the data than the content, or they're so removed from reality that they don't even use their own network.

The data cost would have to drop by more than 90% before anyone selling content would be willing to front the data cost. Right now it's a money losing proposition. Amazon charges developers 15cents per MB. So taking the above numbers it would cost 150$ per GB and cost over 200$ to watch a movie. Which those are charges from AT&T to Amazon.
post #33 of 67
The consumer ALWAYS pays. AT&T needs to realize that people are not as stupid as they think. The best thing to have happened with the iPhone is for other carriers to now be able to offer service. AT&T can go pound sand. They have always tried to screw their customers and apparently always will.
post #34 of 67
Quote:
Originally Posted by jragosta View Post

You are absolutely, totally wrong.

Even when a product is limited in supply (within reason), high volume purchasers often get a discount. Aside from normal volume purchasing decisions, it's less expensive for AT&T to handle one billion bit customer than a thousand megabit customers.

Furthermore, where did AT&T say that supply was tapped out? They said that they were capping a small percentage of people who used to most data to preserve the experience for everyone else, but that doesn't say that they don't have excess capacity.

Look it's pretty simple, if you have a large supply and low demand, you decrease prices to push more supply, that's why you give quantity discount. Now you are right to say that sometimes the cost of selling is going to be cheaper in large quantities in few installments at a discounted price as opposed to small quantities in many installments at full-price. But again, if your supply is limited and the demand is high, you can sell it without discounts. And so sometimes, selling in small quantities more times might even make you more money since, if the demand is good enough, you can factor into the price the transactions costs, keeping the exact same amount of profit.

Think of it like this. I come to you and say, hey I got a product to sell to you. It is in huge demand and selling it will bring more customers to your store to buy other products, in addition to buying this product which will turn you a profit. Do you wanna sell it? You answer, "only at a discount because I'll sell a lot of it for you". Do you think I'll reply "ok". No. I'll say, look it is going to be sold one way or another because of the demand. Either you take it and make money, or I give the money to someone else. So, what say you now? If you don't say yes, it is only because you can stock other merchandise instead of mine and turn a greater profit on it. If you have room to sell mine, you won't turn it down because it'll increase your profit.

Now, regarding ATT. Your reply makes no sense. If ATT had so much data to go around, the few who would be using a lot of it wouldn't be affecting the experience of anyone else. The only time the experience suffers is when too much data is being demanded and there isn't enough supply.
post #35 of 67
Quote:
Originally Posted by johndoe98 View Post

Look it's pretty simple, if you have a large supply and low demand, you decrease prices to push more supply, that's why you give quantity discount. Now you are right to say that sometimes the cost of selling is going to be cheaper in large quantities in few installments at a discounted price as opposed to small quantities in many installments at full-price. But again, if your supply is limited and the demand is high, you can sell it without discounts. And so sometimes, selling in small quantities more times might even make you more money since, if the demand is good enough, you can factor into the price the transactions costs, keeping the exact same amount of profit.

Think of it like this. I come to you and say, hey I got a product to sell to you. It is in huge demand and selling it will bring more customers to your store to buy other products, in addition to buying this product which will turn you a profit. Do you wanna sell it? You answer, "only at a discount because I'll sell a lot of it for you". Do you think I'll reply "ok". No. I'll say, look it is going to be sold one way or another because of the demand. Either you take it and make money, or I give the money to someone else. So, what say you now? If you don't say yes, it is only because you can stock other merchandise instead of mine and turn a greater profit on it. If you have room to sell mine, you won't turn it down because it'll increase your profit.

Now, regarding ATT. Your reply makes no sense. If ATT had so much data to go around, the few who would be using a lot of it wouldn't be affecting the experience of anyone else. The only time the experience suffers is when too much data is being demanded and there isn't enough supply.

I'd suggest that you take some business courses.

Let's take the classic case of something with limited supply - diamonds. You don't think that deBeers gets a better price from the mine than you pay when you buy a diamond ring?

There are quantity discounts in EVERY field - regardless of whether there's excess supply or not.
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post #36 of 67
I can see this encouraging service providers to host on AT&T's backbone and use distributed content delivery. I wouldn't mind seeing my MLB.tv bandwidth as part of the subscription so I'm not paying 12 months a year for bandwidth levels I use only 6. AT&T already hosts that (I think).
post #37 of 67
Quote:
Originally Posted by jragosta View Post

I'd suggest that you take some business courses.

Let's take the classic case of something with limited supply - diamonds. You don't think that deBeers gets a better price from the mine than you pay when you buy a diamond ring?

There are quantity discounts in EVERY field - regardless of whether there's excess supply or not.

As I said, it is supply AND demand. Diamonds, at the prices they are being offered, are not in high demand. In fact, diamonds are being controlled, severely, on the supply side to keep the demand at a high price, and relatively low, making it a luxury item. They don't want the markets flooded with them because then prices for diamonds will plummet as the demand would skyrocket. I think you should find a better example. Also, daBeers is the one paying them miners and controlling what the distributors can do...
post #38 of 67
Quote:
Originally Posted by jragosta View Post

Great example. I could picture someone who wouldn't have a data plan at all, but who would gain access to books or movies via this system.

Um... you don't realize that $30 data plans are required for smart phones? So you get to pay big bucks for your regular data plan when you don't need it anymore, except for low bandwidth usage?


Quote:
Originally Posted by jragosta View Post

I guess no one has explained to you the idea of a quantity discount. If you buy a bag of sugar in the grocery store, it's $3.08 (at Walmart) for a 5 pound bag or $0.61 per pound.

If you're buying it in truckloads, it's under $0.25 per pound.

There's no reason to think that big data buyers don't get a discount, as well.

So what you're saying is 100 million customers can't get cheap data, or even discounted data. We do pay for the service account and REALLY shouldn't be paying for any add-on data plan in the first place! I'm paying $235 a month for my family plan now. $90 of that is for 3 required data plans, and I only use 200 of the 1400 minutes allotted per month. Sh*t my cell phone bill is more than my electricity and auto insurance combined! You don't see something wrong with that?

Quote:
Originally Posted by jragosta View Post

That's another possibility. I'm not sure the economics work out for the developer, but if they do, this would be a good opportunity to shift some of the cost away from the consumer onto the advertisers.

I wasn't going to add another comment to this thread but YOUR naive point-of-view made me mad as hell. You're either a TELCO manager, shareholder, or rich and completely out of touch with the average consumer. That's the only justification I can figure for your lack of understanding of what is going on between customers and AT&T or Verizon for that matter. I'm not going to pay all this money for ads. There is a very big difference between "supply & demand" and extortion of what has become a commodity.
post #39 of 67
This is just a way for AT&T to double-dip, to charge both the producer and the consumer for the data going over AT&T's network. Simply put, there is no way for the consumer to determine how much data he is responsible for vs how much data somebody else has promised to pay for, other than what AT&T tells him at the end of the month.

And AT&T has EVERY incentive to defraud the customer, with no downside [as it's just a civil matter, no class action lawsuit is possible, just arbitrary or small claims court]. And you have no way to prove which app used what data on your phone...
post #40 of 67
Quote:
Originally Posted by johndoe98 View Post

Agreed, but perhaps there is one up spin to all this. It controls what the Data is being used for, so you can't use the Data towards illegal ends, other than in your plan directly with ATT which they ensure is so low you can only do minimal amounts of piracy.

At the end of the day, for everyone using the data legally, there can only be one reason why ATT wants this. They figure they can charge more, on total, for their Data, which is going to be bad for the consumers since the costs will be passed off to them. The developers sure are not going to willingly take less of a cut.

Please enlighten me on this "illegal" data usage? I would love to know.
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