& cplSiteName &

Wi-Fi Usage Drives AT&T to Raise Prices

Sarah Thomas
1/25/2012
50%
50%

AT&T Inc. (NYSE: T) has been one of the most aggressive wireless operators when it comes to Wi-Fi offload, helping customers stay under their monthly consumption caps via the company's 30,000-hot-spot-wide network. But that strategy is now being viewed as a reason why AT&T decided to raise its mobile data prices. (See New Twists in Mobile Data Pricing .)

"AT&T said at a recent conference that they are seeing customers walk up to the edge of their tier and then use a lot of Wi-Fi to stay below the tier," Jefferies & Company Inc. equity analyst Thomas Seitz said Wednesday. "We think AT&T's new pricing plan is devised in part to monetize the traffic they've previously lost to Wi-Fi."

The new plans introduced last week range from $20 for 300MB to $50 for 5GB with a hot-spot feature, and they are all saddled with a policy that charges customers who go above those thresholds. Yet, even as AT&T encourages its customers to continue to use Wi-Fi, CFO John Stephens has admitted it's a reason consumers don't move to higher tiers, and Jefferies' Seitz believes the carrier is now making up for that lost ARPU.

AT&T became the most advanced wireless operator for Wi-Fi out of necessity to relieve network congestion. The carrier has the largest and most integrated network in the U.S. and much of the world. Jefferies point out that this architecture also gives it more flexibility than most carriers, too.

Rather than charge for Wi-Fi use directly, AT&T has the opportunity to add value in the form of security, proprietary services, parental controls and just garnering subscriber information -- all scenarios that Wi-Fi vendors are encouraging operators to pursue. (See Wave Goodbye to Free Wi-Fi and Wireless Operators Embrace Wi-Fi as Their Own.)

In a report Jefferies published Wednesday, the analysts concluded that how the Wi-Fi ecosystem develops could materially influence the pricing power of mobile operators. Either they'll raise prices and risk customers substituting wireless for Wi-Fi or they'll find a way for Wi-Fi to work for them.

"If more consumers begin using Wi-Fi as a wireless alternative, we see the potential for AT&T to monetize its Wi-Fi network in creative ways," the report finds.

AT&T announces its fourth-quarter earnings Thursday, at which time the carrier will release its latest Wi-Fi statistics.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
ibarrera
50%
50%
ibarrera,
User Rank: Light Beer
12/5/2012 | 5:44:33 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


So if it's WiFi usage why driving their prices up, instead of down to get people to use their plans.


The race to increase revenue from quarter to quarter has lead to this new mechanism where ISPs don't offer better services at the same price, but they force customers to move to another plan (a la Netflix), that will bring more money selling untangibles.


Who charges AT&T for ther data? Yet they will probably be forcing people with 200MB plans (which may not need 300MB) to pay $5 more a month. According to my calculations, spreading these plans evenly amonth a month doesn't give you even a net 1kbps service. I remember the times I had a 9.6kbps modem, this is even worse (but they allow the bursts) but people is paying already a lot for the "wireless" advantage.

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 5:44:33 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Sarah I am sure you and I both mentioned this before... the days of free Wi-Fi are probably numbered and it's not a big number. As soon as the roaming/authentication problem becomes less of a problem you can already hear the justification of "it's all one wireless network... and here's your bill for it."


Just like unlimited cell plans, unlimited Wi-Fi is essentially untenable. No part of access, other than unlicensed bandwidth, is free. I know editorius Phil has championed more pay-for-what-you-get plans based on the idea that -- you need to pay for what you use. Wi-Fi will go that direction as well, and when it does all we can hope is that there is enough competition (!) so that providers compete based on service quality and other features and not just because they are the only game in town.

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 5:44:33 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Sarah I am sure you and I both mentioned this before... the days of free Wi-Fi are probably numbered and it's not a big number. As soon as the roaming/authentication problem becomes less of a problem you can already hear the justification of "it's all one wireless network... and here's your bill for it."


Just like unlimited cell plans, unlimited Wi-Fi is essentially untenable. No part of access, other than unlicensed bandwidth, is free. I know editorius Phil has championed more pay-for-what-you-get plans based on the idea that -- you need to pay for what you use. Wi-Fi will go that direction as well, and when it does all we can hope is that there is enough competition (!) so that providers compete based on service quality and other features and not just because they are the only game in town.

gtchavan
50%
50%
gtchavan,
User Rank: Light Beer
12/5/2012 | 5:44:31 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


These clowns just gave away 4.2 billion to competitors and are at least one year behind spending on their networks.  People are fleeing their 300kb DSL service in droves and when they lost Apple they have to share the lucrative Apple business with every other carrier.  The reason they are charging for thie WiFi is becasue they need to tap every possible revenue source to survivie or I should say to pay their executive salary and their union bosses and thier pensions.   ATT is over and done with, and interstingly their demise comes a time when the demand on data networks are exploding and more and more people are depending on networks for their daily lives and when networks is becoming the knowledge base of humanity.  Stick a fork in ATT, they just found another way to PO thier customers.

^Eagle^
50%
50%
^Eagle^,
User Rank: Light Beer
12/5/2012 | 5:44:30 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Sarah,


I disagree with your comment that creative pricing is good.  I think it is bad. 


I should also point out that wifi spectrum is free and unlicensed.  Should we allow ATT to convert that into a fully monetized asset that they paid nothing for?


sailboat

^Eagle^
50%
50%
^Eagle^,
User Rank: Light Beer
12/5/2012 | 5:44:30 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Kaps,


What makes you think that we will actually have choice?  real competitive choice.  My bet is we end up with "the only game in town" scenario with price gouging to follow.  


Also, on a separate note: wifi is on free unlicensed spectrum.  The only "cost" for it is the cost of the wireless access node hardware (really cheap) and the backhaul link.  Given most wifi routers are connected to dsl links and given those links are powered over copper pairs that were long long long ago fully paid for, if ATT can monetize the wifi, then their ARPU should go up quite a bit!  zero cost for the spectrum.  fully depreciated written off cost of the physical plant.  Not bad.


However, I must point out that that rf spectrum does not belong to ATT.  It was intended to be a free band for anyone.  If ATT decides to really monetize it, shouldn't they be paying for that spectrum?  I'm just sayin.....


of course I know I might get spammed for my post.  


but I think the issue of us giving free spectrum to ATT to monetize is an interesting topic.


sailboat

VoiceOnTelecom
50%
50%
VoiceOnTelecom,
User Rank: Light Beer
12/5/2012 | 5:44:30 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Regardless of the specifics of AT&T's moves here, I agree that the times are changing in WiFi.  You have Republic Wireless, with its niche market, which would be devastated by the loss of free WiFi.  But you've also got True Corp. in Thailand spending as much as anyone on the cellular/WiFi handoff.


Where does it all end?  I have no idea.  I'm not buying the "one spectrum" argument though.  Would consumers accept that?

dave@qwest
50%
50%
dave@qwest,
User Rank: Light Beer
12/5/2012 | 5:44:29 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Well geez...AT&T had to fork over @ $4 Billion to Deutche Telcom---they need to recover somehow...:-)   The entire board needs to be fired!!!

shygye75
50%
50%
shygye75,
User Rank: Light Sabre
12/5/2012 | 5:44:22 PM
re: Wi-Fi Usage Drives AT&T to Raise Prices


Wi-Fi is a Band-Aid that's already coming loose. Performance is only going to deteriorate, and fairly quickly given the popularity of bandwidth guzzlers (both apps and devices). Mobile bandwidth is becoming a precious (read costly) commodity. Once operators sort out the details, they should do well. "Should" is the operative word here, though.

Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


The Citrix NetScaler mobile gateway is an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, NetScaler can be deployed on any hypervisor, on a ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
LRTV Custom TV
Mastercard: 2 Billion Adults 'Trapped' in Cash Economy

3|21|17   |   03:51   |   (1) comment


Despite advances made in the last several years, two billion adults around the world are trapped in a cash economy and lack what we take for granted -- a safe way to receive, save and use money. Shamina Singh, executive vice president of sustainability and president of the Mastercard Center for Inclusive Growth, chats about how Mastercard is developing new ways to ...
LRTV Custom TV
Mastercard: Payment From Every Device

3|21|17   |   5:55   |   (0) comments


A world where everything and everyone is connected creates new points of interaction for commerce. These digital experiences cannot be developed in isolation and instead require an ecosystem to drive mass consumer and enterprise adoption and create better consumer engagement. Predicting when that growth will happen is difficult, but always keeping the end user in ...
LRTV Interviews
InterDigital's Role in the 5G, IoT Era

3|21|17   |   05:47   |   (0) comments


Alan Carlton, managing director and VP for Europe at InterDigital, talks about the company's role in 5G projects in Europe and the prospects for the company in the IoT market.
LRTV Interviews
Lessons Learned From Digital Transformation

3|21|17   |   05:51   |   (0) comments


Ravi Palepu, global head of Telco Solutions at Virtusa, talks about some key takeaways from telco digital transformation experiences during the past couple of years.
Women in Comms Introduction Videos
NetNumber's CMO Shares Her Diversity Do's

3|21|17   |   3:19   |   (2) comments


The telecom industry is transforming the world, and diversity plays a critical role in driving the innovation behind it. NetNumber CMO Kim Gibbons shares why diversity and being authentic is a do amidst all the don'ts women in comms often hear.
LRTV Custom TV
Software-Driven Architecture for 5G & IOT

3|20|17   |   1:56   |   (0) comments


We present Heavy Reading's Jim Hodges's report from Mobile World Congress -- where operators and vendors are working to bring a variety of technologies together to make virtualization a reality in the era of 5G and IoT.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: Italy First Pasta the Post for 5G
Paul Rainford, Assistant Editor, Europe, 3/17/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
5G Faces a Marathon, Not a Sprint
Iain Morris, News Editor, 3/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.