Editor’s Note: Looking to bring a younger perspective to the mobile space, RCR Wireless News has tapped Jeff Hawn to provide insight into what’s on the minds of the tech-savvy youth of today.
The verdict is in, and the Federal Trade Commission has ruled that AT&T, America’s largest wireless company, cannot advertise for unlimited data plans, collect fees for “unlimited data” and then when customers hit 3 gigabytes of data slow their wireless Internet speed to a crawl.
The practice known as “throttling” in the industry has been creeping up more and more. Just a few months ago, Verizon Communications and Netflix had a very public spat over Verizon deliberately throttling Netflix streaming speed in an attempt to extort the popular online Internet video company for higher fees. Netflix eventually coughed up the cash, but the Federal Communications Commission is now investigating Verizon’s business practices and the company has suffered a publicity black eye.
Speaking as a Verizon customer, I was sorely tempted to drop their service, however the duopoly nature of Internet providers prevented me from doing so. I have a choice between Comcast and Verizon – you choose the lesser of two evils.
AT&T’s little brush with throttling has left the company under orders to repay $300 million to customers as compensation for their unethical business practices. Not a large hit for a company that posted $33 billion in revenue last quarter, but enough to make stockholders and, more importantly, subscribers, take notice. In recent weeks, both Verizon Wireless and AT&T Mobility have been promoting new data plans like mad. Verizon Wireless is now offering 10 gigabyte plans for $80, and for $100 subscribers can get up to 15 gigabytes. Offering such large plans is a good idea in a market where customers are using their mobile devices for more and more, and in far greater frequency than even five years ago.
I understand that wireless companies want to capitalize on customers’ addiction to mobile Internet as much as possible, but personally I think they are failing. I am fortunate enough to have opted for an unlimited data plan from AT&T Mobility more than five years ago, when unlimited actually meant just that – no limit on your data. I estimate that I use about 5GB to 6 GB per month, as I’m a fairly heavy mobile Internet user, yet I only have to pay a flat fee for the plan.
If AT&T Mobility and Verizon Wireless really want to continue to be profitable and competitive not just next year but five or 10 years from now, their management should look at a more effective long-term model of mobile Internet monetization. Let’s face it; eventually conventional phone conversations will be an anachronism. The wide variety of alternatives such as Skype, What’s Up, We Chat and FaceTime that take up Internet gigabytes instead of phone bandwidth make the end of the conventional phone and text message inevitable. It is time for companies to secure tomorrow’s customers now. Rather than limiting gigabytes and charging arbitrary fees for increased data plans, they should instead create a series of cheap and high-data volume plans say, hypothetically, $20 for 10 gigabytes, $40 for 20 gigabytes and $60 for unlimited. While short-term profits might take a hit, wireless companies that embrace a low-cost, high-reward model for customers will gain a massive subscriber base and insulate themselves against future competition.
Speaking as someone who uses the Internet on his phone more than he makes phone calls, I can attest to the annoyance of consumers who feel like wireless companies think mobile data plans are a passing fad and customers need to be squeezed for as much money as possible before the fad subsides. In squeezing customers not only are wireless carriers alienating long-term subscribers, but they are drawing the ire of regulators, a combination that never ends well for anyone involved.
Jeff Hawn was born in 1991 and represents the “millennial generation,” the people who have spent their entire lives wired and wireless. His adult life has revolved around cellphones, the Internet, video chat and Google. Hawn has a degree in international relations from American University, and has lived and traveled extensively throughout Europe and Russia. He represents the most valuable, but most discerning, market for wireless companies: the people who have never lived without their products, but are fickle and flighty in their loyalty to one company or product. He’ll be sharing his views – and to a certain extent the views of his generation – with RCR Wireless News readers, hoping to bridge the generational divide and let the decision makers know what’s on the mind of this demographic.
