Why AT&T hates your unlimited data plan and worries about Apple’s iMessage

“AT&T’s chief executive regrets the company ever having introduced unlimited data plans, and says worries over loss of revenue from free texting services such as Apple’s iMessage keep him awake at night,” Aabha Rathee reports for Wall St. Cheat Sheet.

“Speaking at a conference in Los Angeles, Randall Stephenson said AT&T’s initial unlimited data plans were a bad decision because it now forces light data users to subsidize heavy ones, instead of the latter simply paying more for more use,” Rathee reports. “Stephenson was also worried about Skype’s growing popularity, as well Apple’s free Internet-based messaging service. ‘You lie awake at night worrying about what is that which will disrupt your business model,’ he said. ‘Apple iMessage is a classic example. If you’re using iMessage, you’re not using one of our messaging services, right? That’s disruptive to our messaging revenue stream.'”

Rathee reports, “However, Stephenson was happy that the then Cingular Wireless, which became AT&T [Mobility], had decided to would support the iPhone… ‘I remember asking the question: Are we investing in a business model, are we investing in a product or are we investing in Steve Jobs?’ Mr. Stephenson said. ‘The answer to the question was, you’re investing in Steve Jobs. Let’s go after this thing. And we went after it, and the rest is history.'”

Read more in the full article here.

61 Comments

  1. Stephenson is an idiot or a liar. The reason for the unlimited data plan was to attract iPhone users. No unlimited data, no iPhone users. Which does he want?

    1. Wrong. The iPhone didn’t need unlimited data plans to attract users. In fact a multitier data plan may have been better from the start to provide a more equitable long term pricing solution. Data bandwidth is a commodity, and should be cheap. But it can’t be free either, and large users should pay more than small users. I think that this is what Stephenson was gettin at.

        1. Granted, but that is a different proposition from your first statement, which restated another way reads, “without unlimited data the iPhone would have not attracted buyers.” That statement is what I consider wrong. Had the iPhone been introduced with a reasonably priced tier data offering, I think it would have been just as successful, and we wouldn’t be in this fix of trying to sustain the unrealistic model unlimited data.

      1. It is extremely dishonest to say that you want people to pay for the bandwidth they use, then bleed people dry on text messages.
        When the phone companies drop these collusive pricing schemes on tiny trickles of data (SMS packets), and compete purely on what they should be – dumb pipes – that will be the day that pigs fly.

  2. Hey Mr. Stephenson, some free advice – instead of lying awake at night “worrying” about your existing business models being eroded by the progress of technology, here’s a crazy notion: DO SOMETHING to get out AHEAD of where technology is going, instead of vainly trying to hold back its progress. Unless you want to be known as the RIAA of the telecom industry – desperately trying to pretend the internet never happened.

    And considering how much money your company is still making from the iPhone, you’re not going to get much sympathy from anyone.

    1. Mr. Stephenson’s view of his “business model” hasn’t changed since the days of MaBell, which was nickel and dime the customer for all you can get. Rent a ringtone? Yeah, that’ll work! Charge to forward a cell phones GPS location? We can do that! Charge 20¢ for a text message? The heaviest texters are teenagers who get the 20¢ from Mom and can’t add. We’ll probably get away with that.

      Along comes the iPhone that works on any network and iMessage and video chat, and Skype, etc, etc etc. Lo and behold! His business model is now pipes. How do you make money with pipes? How do you make people want to use your pipes? Hint: make them big, ubiquitous and cheap. Forget trying to tie your customers down with contracts and locked hardware. That is over. America has better uses for your bandwidth. If you can’t figure out how to serve us with it, we’ll take it back.

      1. That’s the future they want to avoid – they’re addicted to these phony charges they were able to bolt onto telecom services before their bubble burst.

        Now, instead of investing in becoming the best darn wireless network in North America, they’re whining about how their old business model is going away. And that makes them very vulnerable to any competitor who finally sees the light on this and moves in this direction first. (Assuming those competitors aren’t colluding to hold back this inevitable future, which is sadly very likely in Verizon’s case – perhaps Sprint can break their duopoly?)

          1. Quoting from FakeSteve, this section is sooo brilliant and poignant to our fracked up Spirit of the Age, why everything everywhere went to hell and we’re still stuck in an ongoing worldwide depression:

            …along the way the evil motherfuckers on Wall Street got involved and became everyone’s enabler, devoting all their energy and brainpower to breaking things up and parceling them out and selling them off in pieces and then putting them back together again, and it was all about taking all this great shit that our predecessors had built and “unlocking value” which really meant finding ways to leech out whatever bit of money they could get in the short run and let the future be damned.

            EXACTLY.

            So frack off and die AT&T! If you can’t offer customers value, then shut down, shut up and plain old die.

            1. It’s not just “Wall Street”. The Lib-Turds in Government are much more destructive to society than “Wall Street”.

              Time for you lemmings to go back to the padded room.

            2. HAHAHAHA! Who are the lemmings, self-described “DITTO-HEADS”?!

              Have fun sucking on the poison Wall Street teat. I like REAL capitalism, not this F*ck-Thy-Neighbor parasitic fake capitalism with no future.

              But as suckers, I know you can’t stop sucking. Such is the nature of suckage. 😆

      2. But, but, but… there’s not much profit in being a utility company, which is what they would become.

        I think their biggest fear is that, that is their future.

  3. In AT&T is there is a bunch of greedy ass motherfsckers exec. Why blame apple for your fscking mistake. Why just iMessages, why don’t blame BBM, whatsapp, Chaton or anybody else.

    Just waiting for de new iPhone to switch to sprint or I wish apple create there own network.

    Fsck AT&T.

    Regards: from a pissed cust.

  4. I pay for unlimited texting.

    ATT is not losing money when I use iMessage.

    Besides, cellular companies charge way too much for texting. Bits are bits. Customers are being charged a lot more for texting bits compared to the bits used for voice.

  5. When I first read the headline, I thought this article would be about as useful as one entitled “Why businesses charge you for products”.

    Interesting that he is now claiming how “bad” it is that light data users subsidize heavy ones. Eh? That IS the business model of anyone providing monthly subscriptions – pricing the lowest level service plan relatively high so that the consumer has to pay for things they do not want in order to get what they want, eg lowest tier cable bundle being $50+ instead of a la carte pricing.

    I’m sure he is shitting his pants about the day they can no longer charge exorbitant prices for text messaging, which is really just data for which they are arbitrarily charging the consumer more than other data. Why? Because they can.
    I’m sure they will at some point get rid of text messaging fees and simply jack up data plans by the same amount.

  6. What an SOB. He’s worried about losing revenue over text messaging–a service that basically costs the carriers zero dollars. It’s the greatest ripoff in the history of tech.

  7. Is say its not just AT&T hating the unlimited plans, Verizon dumped it also.

    My thought, when the “LTE” iPhone comes out… Those of us with the unlimited plans won’t be able to keep them this time.

    Why?
    We have unlimited 3G data plans.
    New data plan will be required for LTE data rates.. And guess what, 3G plans won’t be available either. Unless you live in a non LTE area yet.

    Just my thoughts. Lawyers will find a way to remove the rest of us from the unlimited plan.

    1. And then it might be time to switch back to Sprint, whom I was with before the iPhone. At least they have committed to keeping their unlimited data plans even including a new iPhone with LTE.

    2. They’re going to make money somehow, that’s their job. Just like Apple, the carriers are in business to make money. You don’t think that Apple is in business to be really cool guys do you? C’mon, it’s a business. They all have one goal and that’s to make a profit. business 101. Apple isn’t your buddy, they’re a huge money making machine. The biggest. That fact seems to somehow get ignored around here. Apple makes great stuff. They are “cool” but they have one objective and that’s profit. And that’s as it should be. It’s America and we love profitable companies. I retired early on AAPL and it is still making me money most weeks. I love my Apple stuff and have been a Mac guy for over 30 years but I understand that the carriers have to stay in business too. So no matter what Apple does the carriers will counter to stay alive. They have to. That said, AT&T is the bottom of the barrel in customer service. Real assholes. My unlimited plan may be grandfathered but AT&T still runs the show. Apple isn’t paying my cell bill, I am. Just like Apple, AT&T does things their way so we can like it or use someone else. Apparently Verizon is just as bad. So we’re fucked. Want all the new stuff? Gotta pay for it. It’s simple economics. But AT&T is a bunch of assholes anyway!

      1. see I see the exact opposite.
        I’ve dealt with AT&T CS, they are normal.

        Verizon… I have been involved in two class action lawsuits against them for their “service” and lies…

        I agree They are all out to make money, my point was that the article targets AT&T.. They all do this.

        Oh and sprint…ate you should read the news. They are quitting, or have quit, the unlimited data on most phones already.

      1. I believe texts to non-iOS users cost 20 cents per text. Ripoff rates, to be sure, but if you don’t text with very many non-iOS users you can definitely save money this way, compared to paying for a texting plan.

        1. A greedy 20¢/msg (for BOTH sender AND receiver, something that is unexistant -and illegal- in most countries) is way too much.

          At a lower rate (say 5¢/msg, only for the sender), non-IP texting may still constitute added value and remain viable for AT&T.

          The conveniences of texting are that (i) one weighs one’s words and there is much more info/bit than in plain voice; (ii) it is a differently timed communication mode, where the corresponded can respond at his/her own leisure.
          Of course the same holds for IP-texting.

          I still have a few friends who insist on buying non-apple products.

      2. TextFree is a good app to be able to send free text msgs to any one. As long as the person responding responds back to your previous msg it will come back into TextFree and you won’t get dinged for a msg through ATT or other provider.

      3. In my case, almost everyone I’d ever want to text owns an iPhone. It didn’t really sink in until I had one myself. There are a few non-iOS texters out there, but they’re the type that text me a couple of times a year.

        Really, iOS is so ubiquitous, iMessage can replace SMS for a lot of people.

        ——RM

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.