Heavy Data Use Puts a Strain on AT&T Service (opens in new tab)

I agree AT&T should offer them subsidized or even free to help offload traffic from their oversubscribed towers. Still, at a one-time-cost of $100 per location, if it gave myself and others near-perfect coverage at home and work, it would be a bargain.

(subscribers + news subscribers - churn) * average rev. per user (ARPU, like "arr-poo") = $$$

How do you increase profits? A few options:

- Get more subscribers. Costs money in marketing $$$, only helps a little bit. Requires more infrastructure.

- Reduce churn. Customer satisfaction has been in the toilet for some time and will be for the foreseeable future. Multi-year contracts w/ termination fees help keep it under control.

- Sell more stuff to your existing customers (you have lots of those) as long as it doesn't cost you much (SMS, ring tones, ...). Minimal infrastructure requirements.

In this view, crappy phones with expensive additional services like SMS, roaming, ring tones, for-pay WAP, for-pay instant messenger, music stores, push-to-talk, etc., all make a ton of sense. Your incremental profitability is great because you don't need too much gear to support these things and you're already billing the customer. On top of that you can negotiate content deals and pretend that customers care about the exclusivity (mMode, VCAST, whatever).

This stuff is what carriers meant by "data services" a few years ago. What's happening now doesn't fit this model; rolling out better infrastructure costs a lot of money and one person can use a lot more capacity in data than voice. 1000 minutes of GSM audio is only about 200MB and costs about $60, meanwhile the same price gets you 5GB of data. Worse, porting a number is often a big hassle but nobody cares what my IP address is. Imagine a world where your company just moves bits and the government is starting to question your key protection against churn (ETFs). If you're an exec at a phone company this is unattractive. Their attitude is "we don't want to be a pipe" (actual quote from a C-level).

So it's not that they didn't know, they just dragged their feet a little bit. To be fair, AT&T in particular cobbled their network together out of a lot of acquisitions so they probably have had a hard time of it.