AT&T was smart & lucky to be the first company to sign an exclusive deal with iPhone. They ushered in the world of real smartphones. With the iPhone, they transformed the mobile landscape forever. However, this deal has come at a cost: network usage. iPhone users are using their data network A TON more than the rest of their users.
Ralph de la Vega, the chief executive of AT&T Mobility was quoted by InformationWeek as saying that 3% of their users are using 40% of their data network. Their response? “Institute a curb on wireless data usage.” This cost cutting measure sounds quiet short sighted. Let’s think of this problem a little differently.
Back in the early days of computing, Intel had a challenge: In order to continue to sell faster processors, they needed software that used the extra power. At every point in time, they found various software companies pushing the edge of technology, ready to use up all the juice that Intel’s processors could squeeze out. Intel worked with these software makers to make sure their software flowed smoother and tried to make sure the software companies were able to take full advantage of the processors Intel was putting out. They saw an opportunity. These software companies were creating the DEMAND for faster processors. The key actions Intel had to do was support them and produce blazing-fast processors for everyone to prosper. Now let’s revisit AT&T’s current “problem.”
AT&T, along with all other mobile data providers are again becoming VERY lucky. Developers for the iPhone, Android & Blackberry phones are creating the demand for faster networks. Rather than looking at this excess usage as a problem, AT&T, Verizon, Sprint & T-mobile need to be jumping up in joy. If they can make the right investments, they stand to profit heavily from the work that Apple, Google and all other developers are doing to create demand for a better experience.
When you notice a certain segment of your user base is asking more from you than your other customers, there is likely a big opportunity there so pay attention, test the waters and then make smart, long-term investments.
This is exactly why we at Web Design Company made a complete shift from offering really nice websites to offering really nice websites that are search-engine friendly and powered by WordPress. It cost us time and money but we’re positioned well to profit substantially in 2010.
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Melvin,
This is a great insight. AT&T seem stuck in the Stone Age with this kind of thinking. Sure, it will cost cash to upgrade their network, but in the long term they will profit far more by finding ways to accommodate these users.
Here in New Zealand, my ISP puts a cap on bandwidth for the month. I can “double my data” for the month, but if — God forbid — I use that up, I’m stuck at dialup speeds. I’m a web developer. I need the speed. And, I’d gladly pay more to keep my connection at the usual 16Mb/s, but, no, Vodafone refuse to take my money.
Yea, I had a friend who went to Australia tell me about that. Seems nuts to me.
Growing has pain. Going from making truck-loads from SMS (which practically cost them nothing) to data plans which probably have a little less margin than SMS is probably a little hard for them to do for now… but it’s part of maturity. You need to make the right investments to secure your place in the future as a relevant company.