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AT&T to iPhone users: Cut back on data!
A man displays his iPhone
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TEXT OF STORY
Kai Ryssdal: No mention of the financial industry today would be complete without the following two items. The last big Wall Street bank still holding onto its bailout money is now apparently in negotiations with the government to pay back the $45 billion it got from TARP last year. That would be Citigroup. No real details to give you on when anything might actually happen on that.
Also, Goldman Sachs. CEO Lloyd Blankfein and his colleagues have clearly heard the hue and cry over its multi-billion dollar compensation plans. Goldman announced today its 30 highest-ranking executives are going to get stock only for their bonuses this year -- no cash for them at all.
The Goldman gang is probably more a Blackberry crowd than it is an iPhone crowd, but still, the iPhone has been a smashing success. Except for the actual phone part. Customers, especially in densely packed cities like San Francisco and New York, routinely have their calls dropped and data connections disrupted. AT&T -- the only carrier you can get an iPhone with -- has a plan for that. You could call it the pretty-please approach to customer service. Marketplace's Stacey Vanek-Smith explains.
STACEY VANEK-SMITH: There are roughly 10 million iPhone users in the U.S., and if you've ever spent any time with one you know they're on their phone a lot -- texting, answering calls, showing off the new koi pond app. And AT&T is making it all happen.
Rene Ritchie is editor of the iPhone blog.
RENE RITCHIE: You have almost a full Web browser, and people are starting to really use data and that's hitting these networks very, very hard right at the cell-tower level. That tower basically gives up, can't handle it and kinda melts into a little pathetic puddle in the corner somewhere.
In the name of pathetic puddle prevention, AT&T is building up its network and asking customers to cut back on things like video streaming. It's also considering charging iPhone users based on how much broadband they use, like they do with phone minutes.
Broadband consultant Scott Cleland says carriers are going to have to start charging because the problem is only going to get bigger.
SCOTT CLELAND: This is going to be a constant dilemma. The more customers you have, the more usage they want to use, puts more stress on a network.
But iPhone blog's Rene Ritchie says even that probably won't solve AT&T's problem. iPhones make up about a third of the smartphones market and even if customers cut back, it won't be enough. AT&T will probably have to give up its exclusive hold on the iPhone.
RITCHIE: To have that many phones on one network, unless that network spends billion and billions of dollars, it's going to be problem.
A new iPhone is set to be released this summer.
I'm Stacey Vanek-Smith for Marketplace.
This is what we call the Tragedy of the Commons. Apparently it is not economical to accommodate that 3% of iPhone users who use 40% of the bandwidth. Frankly, I'd like to see ISPs do this as well. The great American illiterati, who want to do everything in video, are slowing down the Internet for the rest of us.
It's only fair that consumers pay according to usage. I remember how All You Can Eat deals at restaurants disappeared with the obesity epidemic.
Of course, you'd never catch me spending $300 for a cell phone that works with only one service provider. You know what they taught us about competition in Economics 101.
I agree with Tim, why is it the customers responsibility?? As he said, at the cost of the Mobile service and Data plans, I have to use it non-stop to get any kind of value...
If I asked my customers to stop using my services, or even cut back on usage, they would; BY GOING TO ANOTHER COMPANY!! That can handle thier needs and provide what they have paid for...
Why does AT&T think they are any different?
Now, while this is largely AT&T's (and Apple's) fault for selling a service that they were not prepared to provide, the root cause is the principle in computer science that code and data tend to expand to fill or use every relevant resource more than to capacity, and the expectation that hardware improvements will more than keep pace. We need to start training computer scientists who care about storage and bandwidth costs. (I say this as a computer science graduate myself.)
When a data plan for a phone costs nearly as much as what I pay for FIOS service at my home, you bet I'm going to use the heck out of it every chance I get.
AT&T blew it. Instead of upgrading their infrastructure to accommodate the masses of folks buying the iPhone, they forked over the profits to shareholders and executives. Short term profit taking instead of investing for a long haul of success. Sound familiar at all?
Lousy service/coverage? There's an app for that! (Mark the Spot)
First off, a correction on this story. The iPhone does have a real web browser. It's the same browser backend that Apple's Safari and Google's Chrome browser use.
Secondly, I don't understand why this is the customers problem. AT&T is making money hand over fist with the iPhone. A phone that has a link to a video service and a web browser on the main screen. I don't understand how it's the customer's responsibility to not use the technology they've been sold. I know AT&T has had a comfortable near monopoly for years, but it seems that it's their responsibility to spend the money to upgrade their network, or they'll loose customers to any company that is willing to do so.
