AT&T’s Data Cap Won’t Survive

My prediction of the week: AT&T’s data cap won’t survive. I predict it’ll be replaced by tiered service levels – and I’ll explain in a bit.

First, let’s look at the data cap itself. In my view, data caps cause uncertainty, uncertainty triggers fear, and fear triggers loss of revenue.

Why does the data cap cause uncertainty for users? Unlike paying by the minute for a voice call, it’s very hard for a user to predict how a given activity translates to the number of bytes used. Does an hour of YouTube require 160MB, 450MB, or 1GB of traffic?  ow about 30 minutes on Facebook?  Watching a movie on Netflix?  [Actually, the YouTube question was a trick since it depends on the resolution that you choose: an hour of YouTube takes 160MB at standard quality, 450MB at high, and 1GB in High Definition].

What’s a wireless broadband user supposed to do? Obsessively check their data usage and try to remember what it was last time they checked, how much it’s gone up, and what they were doing in that period? This is the only way to build up an intuition about how much data different activities consume, but this is a sucky user experience.

Defenders of the data cap often use the analogies of driving a car or paying per minute for long distance, and  then invoke a fairness argument that the heavy consumers should pay for what they consume. This sounds  good on the surface and leverages society’s disdain for freeloaders, but it glosses over the critical difference  between these activities and data consumption: consumers can easily estimate how many long distance  minutes a 20 minute call will consume or how much gas a 50-mile drive will burn, but this level of predictability  is simply not present for data usage.

 Similarly, the argument that 98% of users won’t be affected by the cap is just plain wrong. Even if only 2% of  users experience data overages, the other 98% will worry about whether they are going to be part of that 2%  — and this makes everyone’s experience worse regardless of whether they actually pay anything extra or not.

 Just to prove the point, try doing a search on “AT&T data cap fear”:

 http://www.google.com/search?q=at%26t+data+cap+fear

In part 2 of this blog entry, I’ll talk about the solution: service-based data limits….

Mike

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