
AT&T aggressively moving against unauthorized tethering - charlief
http://www.tuaw.com/2011/03/18/atandt-aggressively-moving-against-unauthorized-tethering/
======
w1ntermute
Sounds like a wakeup call to anyone doing this on other providers. I haven't
heard anything about this from Verizon, but it's probably time to start
tunneling my tethered browsing via SSH.

This is going to be one of the biggest casualties of a lack of net neutrality
on wireless networks. Like TFA says, there should be no reason you can't
consume the data you have purchased in any (legal) way you see fit.

~~~
tptacek
AT&T didn't sell you generic fungible data. Because you are a nerd on a nerd
site, you're natively inclined to determine that any connectivity is generic
connectivity, measured and priced only by $/bps. But $/bps isn't a product
AT&T sells with generic iPhone plans.

The reason AT&T charges you to tether probably has little to do with
technology and everything to do with segmentation. They have two choices. They
can raise their data rates for everybody and attrit customers to other
providers (or to less lucrative featurephone packages). Or, they can find ways
to charge higher rates to less price-sensitive customers. You are a person who
wants to plug their computer into their phone and use it to get on the
Internet from the Acela train. There are not that many of you, and you are
uniformly wealthier than most other segments of AT&T customers. Finding a way
to charge you for that behavior is marketing 101.

If you're an entrepreneur, it's good that the rest of the world sees things
AT&T's way (to wit: when you agree in a contract that you're going to use a
service in way X and not in way Y, the provider is within its rights to
enforce that contract). It's this force that allows you to charge money for
things and thereby make a living.

If you're anyone earning the anomalously high income accorded to technology
professionals, you're run a slight risk of hypocrisy complaining about this. A
complex web of similarly nerd-arbitrary contracts keeps the money flowing
through the conduits and manifolds that eventually feed your bank account.

~~~
w1ntermute
> AT&T didn't sell you generic fungible data. Because you are a nerd on a nerd
> site, you're natively inclined to determine that any connectivity is generic
> connectivity, measured and priced only by $/bps. But $/bps isn't a product
> AT&T sells with generic iPhone plans.

I didn't say that they did. I said that they would have to IF the FCC had
included wireless telecoms in its net neutrality rules.

> There are not that many of you, and you are uniformly wealthier than most
> other segments of AT&T customers. Finding a way to charge you for that
> behavior is marketing 101.

So they are charging based on what the market will bear, not based on their
costs. This is symptomatic of a lack of competition in the industry (which is
the cause of most of these problems in the first place). Price discrimination
is not possible when there is competition.

~~~
tptacek
Cost-based pricing is symptomatic of commodity markets, like gypsum. Most
everything that isn't a commodity is priced according to the market. Is the
disagreement here that you think wireless Internet is gypsum, and I think it's
canned tomatoes?

Competition and cost-based pricing are entirely orthogonal issues. There is
intense competition in the market for (say) beer, but it takes the form of a
marketing dogfight of changing product attributes and highlighting instead of
race-to-the-bottom pricing.

~~~
w1ntermute
> Is the disagreement here that you think wireless Internet is gypsum, and I
> think it's canned tomatoes?

You're missing the point. It's not like you can change the fact that telecoms
(with current technology) tend towards a natural oligopoly. All you can do is
rein in their market power via legislation.

> Competition and cost-based pricing are entirely orthogonal issues.

Not at all. Fundamental economic theory states that in a pure monopoly,
sellers have the ability to set the prices, so they can price discriminate and
charge each customer the maximum he will pay. In pure competition, the price
will eventually reach the marginal cost.

Cost-based pricing isn't symptomatic of commodity markets. Cost-based pricing
and commodity markets are symptomatic of pure competition.

> There is intense competition in the market for (say) beer, but it takes the
> form of a marketing dogfight of changing product attributes and highlighting
> instead of race-to-the-bottom pricing.

You're conflating the competition's intensity and perfection. As with beer,
there's also intense competition among telecoms ("Only the AT&T iPhone lets
you talk and browse the web at the same time", "Verizon has 5x better coverage
than AT&T"). That doesn't change the fact that there's an oligopoly (both in
beer and in telecoms). The fact that the products are not homogenous across
the market further emphasizes this.

------
molecularbutter
This is outrageous and it's a harbinger of things to come for all internet
communications, goodbye net neutrality you will pay to use data how you want.

Let's geek out though, does anyone know HOW they are determining who is
tethering? Is it just excess data use that is flagging your account? Are they
watching packets? If you use a VPN would they not be able to detect tethering
use?

~~~
tzs
This is not a net neutrality issue.

~~~
sabat
Of course it's a net neutrality issue. AT&T wants to charge more for data from
a tethered computer than it does for a non-tethered computer. Bits are bits:
that's the point of net neutrality. If you pretend that "all bits are created
equal, but some are more equal than others" (apologies to Orwell), then you're
not net-neutral.

~~~
tzs
No, net neutrality is about not discriminating based on who you are
communicating with or the meaning of the bits. For example, if AT&T had a deal
to promote Bing, and as part of that blocked or limited traffic to Google,
that would be a net neutrality violation (discrimination based on remote
endpoint). Or if they detected and throttled VOIP traffic, that too would be a
net neutrality violation (discrimination based on the meaning of the bits).

They are discriminating against people who hook up unauthorized computers to
their network. That's outside the scope of net neutrality.

~~~
uxp
You are both right.

AIUI, Net Neutrality can be defined as treating every endpoint the same. My
connection to Google, Yahoo and Bing should be exactly the same, as what you
said. But does it really matter which device I connect to Google, Yahoo or
Bing with? No. My phone is still an endpoint on the internet, as the only
difference between a starting point and an ending point is the direction.

You might have a point arguing that bad network users (spammers, zombies and
over-consumers) should be discriminated against, but that is not a neutrality
rule, since those users did something to degrade the performance of others.
Blindly saying that an iPhone is not allowed on my network is exactly the same
as saying no one is allowed to connect to Facebook on my network.

In this case though, and especially the Reddit thread early this morning that
seemed to spark this debate, users were showing consumption habits of 150GB+
per month on their 3G connection. I have no problem enforcing some restraining
rules against them (like throttling over a certain number). But claiming that
every packet coming from my laptop tethered to my phone should be charged at a
15% premium compared to the ones that come from my phone directly is
ridiculous and is a violation of net neutrality.

------
orijing
I would expect Verizon to follow AT&T in this move within short time, just
like how VZ eliminated the unlimited plan very soon after launching the
iPhone.

It would make sense if Verizon and AT&T had these patterns of interaction
(from their perspective). It sets a precedent for AT&T to make changes that
are good for profits, and Verizon following suit, thus magnifying the effect.
Since they are the two biggest providers of services in the US, it makes sense
that they'd have an implicit agreement to collude.

Although it's hard for me to disagree with their offering tiered services (It
makes sense from a social-surplus standpoint with respect to monopolies and
monopoly pricing), as someone else already mentioned, this is symptomatic of
the lack of competition (which also, to an extent makes sense because of the
natural-monopoly nature of the industry).

In short, this is a result of a market failure
(<http://en.wikipedia.org/wiki/Market_failure>) where there are a few possible
solutions:

1\. The government steps in and offers a competing service, at marginal cost.
But who says the government can do it better, or even at parity?

2\. The government auctions off a contract (Say, in terms of $/year) to a
provider, and subsidizes them (at the unit level) such that marginal revenue =
marginal cost. The good thing is that the final price of the auction in a
competitive market (no collusion, implicit or explicit) incorporates the
benefits of the stream of subsidies and monopoly profits. As a result of this,
we can achieve a socially optimal (i.e. pareto efficient) outcome. The problem
is that it's hard to know MC for sure.

3\. The government imposes price caps slightly above marginal cost. Again,
what's the marginal cost?

4\. Break them up into little chunks. However, this would eliminate a lot of
the benefits of natural monopolies and economies of scale.

All of them have some problems of their own, not to mention headwinds against
political action

~~~
metageek
5\. The government requires every mobile carrier to sell access wholesale, at
cost. (And, yeah, again, what cost?) Like line sharing.

~~~
orijing
This is a subset of "require price close to marginal cost" option.

~~~
metageek
Mmm, not really the same thing. In the wholesale case, the spectrum holder
isn't incurring the costs of delivering service to individuals, such as
customer support, individual billing, and advertising. That brings the
wholesale price much lower than the marginal cost of providing retail service.

One interesting variation would be for the spectrum holders to sell _only_
wholesale service. They would then be competing on technical attributes such
as reliability, while the retailers would be competing on customer service and
bundled applications. Some retailers could even offer devices that worked
transparently with multiple wholesalers, allowing retailers to switch
wholesalers, instead of being locked on like today's virtual carriers.

------
jonpaul
I tether on iOS 4.0... but can someone explain the difference to me between
the "personal hotspot" feature in the 4.3 iOS release and tethering in
previous versions? Do you still have to pay the extra AT&T fee for the
personal hotspot feature like you do for tethering?

~~~
tptacek
Yes, you do.

~~~
jonpaul
But for Verizon it's free??

~~~
tptacek
I don't know what Verizon does (I'm at AT&T customer) but "Personal Hotspot"
is simply the new term for "tethering".

~~~
ominous_prime
Yeah, "tethering" was previously usb, then bluetooth (ooh, almost forgot IR
tethering). Now that you can tether with wifi, they changed the marketing term
to "personal hotspot"

~~~
metageek
Oh, man. I remember tethering my Zaurus over IR on the train, trying to keep
the Zaurus and the phone lined up so it wouldn't drop the connection. I think
I did that just once.

------
StatusStalker
I'm still tethering and haven't received an email. There is always going to be
a way to out smart you AT&T!

