Meeker, AT&T In Tune On Tiered-Pricing

by Mark Walsh, Dec 16, 2009, 12:47 PM

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AT&T's Ralph de la Vega caused a stir last week when he suggested at the UBS conference that the carrier might adopt usage-based pricing to help curb bandwidth consumption by heavy data users on the iPhone and other smartphones.

The company's chief executive for mobility and consumer markets pointed out that just 3% of smartphone customers accounted for 40% of AT&T's data traffic, mainly from activities like audio- and video-streaming.

With the release of Morgan Stanley's doorstop of a report on the mobile Internet Tuesday, that same figure is cited in predicting the emergence of tiered-pricing to help carriers manage network traffic. "The top 3% of data subscribers typically consume over 40% of total data traffic. Moving these subscribers to higher revenue buckets should help alleviate the network strain. Introducing lower usage plans for a lower price should also spur more adoption," reads the report, which influential Morgan Stanley analyst Mary Meeker first presented in October at the Web 2.0 Summit.

So did de la Vega get that figure from the report or did input from him and other wireless industry executives simply inform the study's findings and conclusions? Hard to tell. Either way, it reinforces the understanding that cable TV-style tiered-pricing is coming to smartphones after flat-rate plans helped drive up data demand in the first place.

The Morgan Stanley report also backed up de la Vega's promise that AT&T's service would be improving in the most strained markets of New York and San Francisco. Additional spectrum and backhaul capacity along with other network upgrades would lead to improved services starting in early 2010, with network capacity increasing throughout the year. That is, if AT&T's network survives "Operation Chokehold," the plan proposed last week by Daniel Lyons (aka Fake Steve Jobs) urging iPhone users to turn on data-centric apps at noon on Friday in an effort to overwhelm the carrier's system.

What Lyons on his Secret Diary of Steve Jobs blog called a "digital flash mob" is meant to protest any AT&T steps to limit data usage hinted at by de la Vega. AT&T was not amused. In a statement yesterday, the company condemned any attempt to "deliberately degrade service on a network that provides critical communications services for more than 80 million customers."

Stay tuned.

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