AT&T backs down from data-throttling threat

Study shows that big data users aren't 'hogs.'

By Jonathan Berr Mar 2, 2012 1:23PM
Image: Worried Man (© John Howard/Getty Images/Getty Images)Faced with mounting public pressure,  AT&T (T) has modified its plan to slow down service for customers with unlimited data plans whose data use tops 3 gigabytes.

Users who had complained that their service was throttled without warning will now receive a text message when they near their limit, according to the Associated Press. The action will not take place for several days. 

Previously, AT&T reduced data speeds for the 5% of unlimited users who used the most data. People reportedly saw their service get throttled when they used about 2 gigabytes of data. AT&T's critics have argued that the policy is unfair -- an argument that was backed up by a recent independent study.

"There is virtually no difference in data consumption between those on unlimited and those on tiered plans -- and yet the unlimited consumers are the ones at risk of getting their service turned off," according to Validas, a wireless analysis firm, which examined 55,000 cell phone bills. "So it's curious that anyone would think the throttling here represents a serious effort at alleviating network bandwidth issues."

Curious indeed.

An AT&T spokesman, Mark Siegel, disputes the study.

"I am not sure how Validas came up with its numbers, but I can tell you they are at odds with our customers’ actual usage," he said in an email to Top Stocks. "Smartphone customers on the unlimited data plan in fact use 50 percent more data than customers on our tiered plans. "

 

AT&T CEO Randall Stephenson warned in December that the failure of the T-Mobile deal would lead to higher prices and capacity constraints, Bloomberg News noted. AT&T no longer offers unlimited-data plans but is honoring its existing contracts, though it seems likely it will try to figure a way out of them.


The typical smartphone user consumes 435 megabytes of data each month, roughly seven times lower than AT&T's threshold. But as data-intensive services such as streaming video surge in popularity, more users will hit their limits. Increased fights between bandwidth owners and consumers over usage are inevitable.

This is an issue that needs to be addressed by Congress.

Jonathan Berr doesn't own shares discussed here.


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