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AT&?s missteps point to carriers? challenge meeting growing mobile data use

Following thousands of complaints from customers, AT&T said it will revise its data throttling policy and only slow down service for unlimited data subscribers when they reach 3GB of usage within a billing cycle.

The news comes at a time when mobile data use is exploding and carriers are under pressure to find ways to deliver the data that consumers want in a cost-effective manner. As the recent news from AT&T shows, finding the right balance between data accessibility and cost is proving to be a challenge.

?Operators will be experimenting over the next year with a variety of approaches to pricing mobile data? said Rich Karpinski, senior analyst for mobility at Yankee Group, Boston.

?Right now, most of them aren't making as much profit as they'd like to with their data services, even though they are growing and smartphone use in general is exploding,? he said.

?If every experiment results in bad press, they could be in for a tough time. They need plans that deliver greater value -- better service, friendlier pricing, etc. -- and not ones that feel punitive.?

Data usage soars
Previously, AT&T was slowing down service when unlimited data subscribers entered the heaviest 5 percent of data users for that month. Some subscribers said their data service had been slowed down around 2 GB of data use, according to several reports.

After numerous complaints from customers who said the policy was confusing because they did not know in advance what the data limit would be, AT&T made the adjustment.

According to AT&T, in January, the top 5 percent of its unlimited data plan customers used an average of over 50 percent more data than the top 5 percent of customers on its tiered plans.

?The reason reduced speeds only apply to unlimited smartphone customers is because their data usage is significantly higher than those on tiered plans,? AT&T said in an official statement.

?Because spectrum is limited and data usage continues to soar, we manage our network this way to be as fair as possible and so we can provide the best possible mobile broadband experience to everyone,? AT&T said.

The changes mean customers with a 3G or 4G smartphone who also still have AT&T?s unlimited data plan will see speeds reduced if they use 3GB of data or more in a billing cycle. Speeds will return to normal at the start of the next billing cycle.

For customers with a 4G LTE smartphone ho also still have an unlimited data plan, data speeds will be reduced if usage is 5GB or more in a billing cycle.

Throttling users
While speeds will be reduced, customers will still be able to use an unlimited amount of data each month.

?'Throttling' in general is a tough sell to customers -- who wants to be 'throttled'?,? Mr. Karpinski said. ?Sounds painful.

?That said, dialing back users when they pass their monthly data threshold is a lot less painful for customers then getting hit with big overage charges,? he said. ?So there's a time and place for such plans.

?T-Mobile, for one, has used them fairly well, helping users to get the data they need at a good price while protecting them from 'bill shock' overages.?

AT&T and other carriers have been moving away from unlimited data plans as mobile data usage continues to grow at a significant pace and moving toward tiered plans that tie cost to a monthly data limit.

While AT&T no longer sells unlimited data plans to new customers, those already with a contract for an unlimited plan can keep it. AT&T has 17 million unlimited smartphone subscribers.

?AT&T quit offering unlimited plans some time ago - as have most operators - so this is more about dealing with grandfathered customers then how they - or the market - will work going forward,? Mr. Karpinski said.

?That said, AT&T's missteps here kept what should have been a behind-the-scenes transition issue with a few customers in the headlines for way too long, giving it a black eye it probably could have avoided,? he said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York