
WSJ: AT&T Plan Would Let App Makers Pay for Subscribers' Data Use - ONE37
http://www.one37.net/blog/2012/2/27/att-plan-would-let-app-makers-pay-for-subscribers-data-use.html
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jkeel
I see too many problems with this idea.

(1) App makers that transmit data already pay for their web services'
bandwidth. So they are basically getting double charged for the same data. (2)
If app makers transmit data to other open services (Twitter API, Facebook API,
YouTube API, etc.) then does the app maker pay for the subscriber's data use
or does the API provider? Looks like a lot of room for confusion. (3) It
shields the true cost of the subscriber's usage in much the same way I see
company paid health care shielding employees from the true cost of health
care. I would imagine this would result in AT&T raising their fees more and
more against the app makers without subscriber's being aware and taking the
blame on any increase in the cost of the app on the app maker rather than
AT&T.

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wmf
Given metered pricing, it's not really double-charging. Today the server pays
for the packets to travel half way and the customer pays for them to travel
the rest of the way. If the app pays for both halves then (in theory) the
total charge is the same; it's just being paid by a different party. I doubt
that AT&T would charge an app the same ridiculous overage fees they charge
customers, though.

Regardless, the market distortion caused by the cost-shifting is real and
problematic.

~~~
runako
> If the app pays for both halves then (in theory) the total charge is the
> same

It sounds like you're assuming the carrier (AT&T) would stop charging the
consumer for the bandwidth as well. As in AT&T would offer a data plan without
a data fee. I'd wage that AT&T's gambit is to get paid twice for the same
carriage, and not what you have in mind.

~~~
wmf
"A feature that we're hoping to have out sometime next year is the equivalent
of 800 numbers that would say, if you take this app, this app will come
without any network usage."

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quanticle
So, in other words, unless you're already rich enough to pay for your
customers' data usage, your app will be at a disadvantage on AT&T's network.
This is why we need source-neutrality in networks. Otherwise existing players
can subsidize their services and "dump" their product in order to drive new
competitors out of the market.

~~~
maratd
> This is why we need source-neutrality in networks.

No, we do not. There are already laws on the books against "dumping" their
product to drive out competitors. It's called price bashing and it is illegal.

If Netflix is able to subsidize their data usage and remain profitable, great.
If, on the other hand, Netflix decides to go with this to kill off the
competition with the calculus that they will lose money temporarily and hike
prices after the competition is gone ... well, that's illegal and on top of
everything, won't even work.

Also, AT&T's ploy here won't work either. They are trying to increase data
usage while hiding the cost of that usage in 3rd party fees. Yeah. Watch
content providers offer two price tiers. One for AT&T and one for non-AT&T.
Won't work and a waste of time. You're just shifting costs.

Also, 800-numbers became popular during a time when every street corner had a
pay phone. It was about actually letting the customer contact you from
anywhere, not about shifting costs.

There is no need for regulation. The market will take care of this stupidity
by itself.

~~~
Hemospectrum
Sounds great on paper. In real life there's a certain degree of collusion
between the major carriers, and it's possible AT&T could convince Sprint and
Verizon to play the same game. It's also possible one of them had the idea to
begin with, and AT&T won't even be the first to implement it.

After a couple of years you might get a class action lawsuit far enough along
that the FCC says the whole thing is perfectly legal and it doesn't see the
problem. Or the carriers might backstab each other for secret reasons. But
this matter cannot be trusted to the market.

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mwsherman
This is the equivalent of free shipping. I predicted it a while ago (patting
back): [http://richvsreach.wordpress.com/2008/06/03/the-long-game-
on...](http://richvsreach.wordpress.com/2008/06/03/the-long-game-on-metered-
pricing-free-shipping/)

What it’s not is net-neutral. I’m OK with that.

~~~
DenisM
Good call. I called it too, much later than you though.

[http://blog.altudov.com/2011/08/27/the-upcoming-amazons-
andr...](http://blog.altudov.com/2011/08/27/the-upcoming-amazons-android-
tablet-will-eclipse-the-iphone-app-store/)

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ONE37
The cost for data does not dissipate, it is merely redistributed. Rather than
giving your money to AT&T for your service, it will just be charged by data-
heavy services - particularly as this would increase their data costs.

Furthermore, reliance upon such a system would likely give AT&T license to
reduce data package size, thus harming the average smartphone user.

Although AT&T might frame this as innovation, such maneuvering is
transparently self-serving. Rather than having the customer blame them for
high costs and decreasing data allowances, AT&T can place the blame elsewhere.

Knowing AT&T as we do, the potential for good in this model is rather woefully
undercut by its obvious potential for bad.

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brd
So instead of giving up on the flawed idea of data caps, they are putting the
onus of caps on app makers instead of customers? I can only imagine that this
new spin on an old strategy will have all the same problems.

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fieldforceapp
Perhaps this technical post from AT&T labs (<http://bit.ly/zFyXTw>) discussing
their work with Pandora to optimize power & bandwidth consumption might shed
some light on AT&T's thinking. It might be a win-win for AT&T to partner with
such app producers, optimize their network utilization in exchange for some
end user subsidy -- extending the subsidy carriers give to device manufactures
to the app developers, essentially?

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morganwarstler
This is Amazon's Whispernet tied to service instead of device, and it is
certainly, "fair."

We don't expect users to pay service fees to get Kindle books delivered.

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davidu
I think this is really a smart move, and would create a brand new revenue
stream for the carriers coupled with (ideally) cost-savings for the customer.
It'd also encourage efficiencies by app developers in how they use the
network.

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jseims
It would be REALLY interesting to flip this model.

In other words, AT&T redistributes a portion of their subscription revenue to
app makers based on the bandwidth they get people to use.

Then, app makers would have a direct financial incentive to drive usage,
without all the hassles of explicit billing.

~~~
untog
But more bandwidth usage is _exactly_ what AT&T doesn't want.

~~~
bryanlarsen
What a messed up system. AT&T is in the business of selling bits. Most sellers
want to sell more of what they sell, not less...

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DLWormwood
No, AT&T is in the business of selling _phone contracts_. The actual bits
themselves are loss leaders to help sell those subscriptions.

~~~
bryanlarsen
OK, you're right. Maybe it was wishful thinking: they should be in the
business of selling bits.

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bgrissom
Should restaurants pay for the gas I use to get there?

~~~
bradleyland
This is a poor analogy, because you don't pay a flat monthly fee for your gas
usage. The customer is already incentivized not to drive too far to eat at a
restaurant because of the fuel expense and the time required to get there.

There are few analogies that work well outside of examples involving
utilities, but most utilities are metered rate. The carriers built their
current pricing models based on a usage profile that is rapidly disappearing.
Basically, they priced their service for a model where the user rarely uses
the actual service. Now they're desperately trying to escape their own trap.

Carriers believe that users don't want metered service, and in fact, they
don't. Why would I want to expose myself to additional risk when a flat rate
service is already available? Carriers captured massive profits when cellular
users didn't utilize their plans, but aren't prepared to take the hit when
consumers actually use what was sold to them. It's a sham.

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tomjen3
That actually doesn't seem like such a bad idea. Well except that the
connections should have been unmetered like residential broadband is (in most
of the world) in the first place...

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J3L2404
Can someone summarize the actual WSJ article or submit a non paywall link?

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appleflaxen
What the hell? I __already __pay for my data. AT &T is just making a blatant
money grab.

They need some competition.

