“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.”
Dude, go eat a bag of dicks. Seriously. You are, in 2012, STILL making $1,250 dollars per MEGABYTE of text message data. If there's anything that requires "disruption," it's the disgustingly gross excess of the text messaging business model. Long live capitalism and innovation.
It's incredible that he worries about disruption, when if AT&T were to disrupt its own text message model, they'd be lauded for it by customers and technology advocates.
What do large companies gain by not being the first to disrupt their own markets, aside from obsolescence?
Here's another question; what's the long-term effect of inspiring absolutely incandescent levels of loathing among "customers" who actually feel like severely exploited captives? Could that produce anything that might disrupt a business model? Maybe? Possibly?
I'd be willing to bet they subsidize their data pricing with that text messaging revenue. How many of AT&T's iPhone activations come with a fat text-messaging plan? Data plans are low-margin; text messaging is high-margin.
AT&T, along with most other carriers, made a tremendous amount of capital investment in the last few years to improve the service they provide to smartphone owners. iMessage is a threat to their margin-stealing model.
If they made text-messaging free—or just counted its data use against your data plan—but raised the price of your data plan by $15/mo, how would you feel?
The way Apple introduced the iPhone was as revolutionary as the product itself. No carrier garbage on the phone, no carrier control of the end-user experience, "open" platform for apps (that came a little bit later), and unlimited data.
Apple invented none of that. My first smartphone, the Treo 300 (released in 2003) had no carrier garbage, was a much more open platform than iOS, and at least on Sprint came with an unlimited data plan.
Those features were unusual in the dumb-phone dominated industry at that time, but were omnipresent when it came to smartphones.
While unlimited data leaves something to be desired. I had to flash Galaxy SII with a more recent Android OS without all the AT&T crapware just 20 mins after buying, it was simply unusable.
What begs a question, how can cellular phone providers even think, that their team of 12 underpaid code monkeys capable of producing software that's on par with google? AT&T places, map searching apps, etc are utter crap and you can't even get rid of them unless you flash the OS.
Unfortunately this problem isn't tied only to cellular phone providers. Network card manufacturers for Windows (yes, I'm looking at you Intel) come with their own crapware utilities who think their monitoring app is better than default windows wifi manager. Similarly, consumer routers that race to offer more and more features DMZ, QoS, etc but have millions of bugs because they're not software shops and still refuse to use DD-WRT or Open-WRT which are clearly better and have been developed, used and supported by thousands of professional.
Not sure why you're at the bottom of the thread here, it's quite true. Up until the iPhone's release, none of those things you mentioned were the norm.
Smartphones quite frankly sucked until halfway through 2007. It's been a nice climb ever since, and you can see the effect the iPhone had on other companies designs and policies. Pre 2007 smartphones looked like they were going after the Blackberry crowd.
AT&T seems to have forgotten how many customers they gained by being the only network to offer iPhone for a long time. Now that they've got those users, it's easy to take them for granted, and wish they'd done things differently. Had they not offered an unlimited data plan in the beginning, Apple may have went with another provider. Apple benefits from commoditizing industries adjacent to their main: hardware.
Mobile internet access is a commodity, just as wired internet access is a commodity. Most ISPs today advertise UNLIMITED LIGHTNING FAST DOWNLOAD SPEEDS, knowing that their network can't support everyone downloading at that speed at once.
It's like gym memberships. Gyms can't support all of their members showing up at the same time. In fact, they profit on the fact that most people underutilize their membership. What gyms don't do, is harass, limit, and double charge members who show up every day, to work out and get their money's worth.
Stephenson really should have been called out in the article on the assertion that every megabyte downloaded has a marginal cost. There's no way to squint at that hard enough to make it true.
The article you link to really doesn't support your claim. Yes, bandwidth is plentiful off-hours and expensive during peak times, so pricing based off of total usage regardless of when the data is used is crude. (This is why voice plans have had things like "weekend minutes".) But a heavy user really does have a higher marginal cost than a light user. In the absence of more complicated pricing (which consumers often reject), data caps are reasonable.
Maybe he phrased it badly, but his point still stands.
More users downloading more stuff requires more infrastructure.
At some point enough users downloading enough stuff will saturate the hardware, and they'll have to throttle usage, or spend a boatload on new infrastructure.
This reminds me about bosses of incumbent French telcos when Free launched at a third of their prices for a better plan: "this is terrible, our margins will go gown!" instead of "That's terrible, now our customers will see we were ripping them off!".
Data really has to be near unlimited, it's too difficult for folks to understand how much 1MB of usage is. I have a 6GB data plan and no matter what I do, I never hit 6GB. This is essentially unlimited to me.
I would argue that it was the existence of unlimited data by default that "pushed the phone industry into a data-driven model," which Stephenson acknowledges to be a good thing. Without unlimted data, especially in the early days, you would have had customers fretting over every MB rather than engaging with the full app ecosystem and freely exploring the capabilities of the new technology.
Buy that same logic we should sell people unlimited electricity plans, and see what that does to electric companies when people stop fretting about each and every milliwatt of power they are using.
The problem is that when customers stop caring about how many watts of power they are using and start purchasing products made by manufacturers that no longer are serving a market that has any notion of efficient power consumption you will get the exact same situation that is happening with mobile data.
Specifically, products that use an immense amount of power for a killer feature (such as electric cars; analog being gigabytes/day data usage for things like Netflix) will start proliferating, increasing the average power usage of each person above the floor used to calculate the cost of the unlimited plan.
In that situation, it is fairly obvious that the power company is then going to have to change their rate scheme, as otherwise they are just subsidizing electric cars: neither the users nor the electric car companies (again, Netflix) are otherwise paying for the increased societal power usage.
The temporary initial reaction will then simply be to ban electric cars from the power grid (as happened with Netflix: did not work over 3G due to the bandwidth cost) while the rates are restructured, a return-to-sanity would occur where unlimited plans are dropped, which then will allow those high-power-using products to actually be distributed to users.
The whole while, of course, people will be whining on forums about how power companies have already laid out the cable, and how the marginal cost of power is effectively zero at some points during the day, and how unfair it was for the power companies to take away the unlimited plans; and, when a representative from the power company points out that it was a mistake, he will be lambasted.
That was a good gamble. If he got T-Mobile, he could easily charge whatever he wanted for GSM service. Hell, he could have charged the first person the 6 billion dollars. What could go wrong?
“You lie awake at night worrying about what is that which will disrupt your business model,”
Your business model is ripping people off, I hope you die of insomnia (not literally). Phone bills have skyrocketed in the past 5-10 years as everyone has a cell and as salaries more or less stay the same. Let's not even talk about customer service.
But people are spending far more time on their phones today than they were 5-10 years ago. It shouldn't be a surprise that they're spending more money on their phones, accessories, telecom service, apps, etc. than they were 10 years ago, regardless of what their salary is, since the phone is involved in more aspects of their life.
For what it's worth, if you want to use your phone in exactly the same way you did 10 years ago (occasional short voice calls), you can do it much cheaper today than then, with a TracFone.
[+] [-] lectrick|14 years ago|reply
Dude, go eat a bag of dicks. Seriously. You are, in 2012, STILL making $1,250 dollars per MEGABYTE of text message data. If there's anything that requires "disruption," it's the disgustingly gross excess of the text messaging business model. Long live capitalism and innovation.
[+] [-] tiles|14 years ago|reply
What do large companies gain by not being the first to disrupt their own markets, aside from obsolescence?
[+] [-] alexqgb|14 years ago|reply
[+] [-] bdb|14 years ago|reply
AT&T, along with most other carriers, made a tremendous amount of capital investment in the last few years to improve the service they provide to smartphone owners. iMessage is a threat to their margin-stealing model.
If they made text-messaging free—or just counted its data use against your data plan—but raised the price of your data plan by $15/mo, how would you feel?
[+] [-] spoiledtechie|14 years ago|reply
http://spoiledtechie.com/post/2008/05/07/The-Actual-Cost-of-...
I totally agree. This business model needs disruption badly.
[+] [-] macspoofing|14 years ago|reply
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] gcb|14 years ago|reply
You should tell everyone that pays for sms that.
I refused to pay 15/mo for unlimited sms on my contacts. I rather not have it.
Now, you go eat that or cancel you sms plan. If i were him, I'd charge even more from you suckers. You just keep paying.
[+] [-] macspoofing|14 years ago|reply
[+] [-] necubi|14 years ago|reply
Those features were unusual in the dumb-phone dominated industry at that time, but were omnipresent when it came to smartphones.
[+] [-] MrVitaliy|14 years ago|reply
What begs a question, how can cellular phone providers even think, that their team of 12 underpaid code monkeys capable of producing software that's on par with google? AT&T places, map searching apps, etc are utter crap and you can't even get rid of them unless you flash the OS.
Unfortunately this problem isn't tied only to cellular phone providers. Network card manufacturers for Windows (yes, I'm looking at you Intel) come with their own crapware utilities who think their monitoring app is better than default windows wifi manager. Similarly, consumer routers that race to offer more and more features DMZ, QoS, etc but have millions of bugs because they're not software shops and still refuse to use DD-WRT or Open-WRT which are clearly better and have been developed, used and supported by thousands of professional.
[+] [-] Karunamon|14 years ago|reply
Smartphones quite frankly sucked until halfway through 2007. It's been a nice climb ever since, and you can see the effect the iPhone had on other companies designs and policies. Pre 2007 smartphones looked like they were going after the Blackberry crowd.
[+] [-] protolif|14 years ago|reply
Mobile internet access is a commodity, just as wired internet access is a commodity. Most ISPs today advertise UNLIMITED LIGHTNING FAST DOWNLOAD SPEEDS, knowing that their network can't support everyone downloading at that speed at once.
It's like gym memberships. Gyms can't support all of their members showing up at the same time. In fact, they profit on the fact that most people underutilize their membership. What gyms don't do, is harass, limit, and double charge members who show up every day, to work out and get their money's worth.
[+] [-] irons|14 years ago|reply
http://arstechnica.com/tech-policy/news/2012/04/why-we-shoul...
[+] [-] jessriedel|14 years ago|reply
[+] [-] jlarocco|14 years ago|reply
More users downloading more stuff requires more infrastructure.
At some point enough users downloading enough stuff will saturate the hardware, and they'll have to throttle usage, or spend a boatload on new infrastructure.
[+] [-] louischatriot|14 years ago|reply
[+] [-] seanmccann|14 years ago|reply
[+] [-] rylz|14 years ago|reply
[+] [-] saurik|14 years ago|reply
The problem is that when customers stop caring about how many watts of power they are using and start purchasing products made by manufacturers that no longer are serving a market that has any notion of efficient power consumption you will get the exact same situation that is happening with mobile data.
Specifically, products that use an immense amount of power for a killer feature (such as electric cars; analog being gigabytes/day data usage for things like Netflix) will start proliferating, increasing the average power usage of each person above the floor used to calculate the cost of the unlimited plan.
In that situation, it is fairly obvious that the power company is then going to have to change their rate scheme, as otherwise they are just subsidizing electric cars: neither the users nor the electric car companies (again, Netflix) are otherwise paying for the increased societal power usage.
The temporary initial reaction will then simply be to ban electric cars from the power grid (as happened with Netflix: did not work over 3G due to the bandwidth cost) while the rates are restructured, a return-to-sanity would occur where unlimited plans are dropped, which then will allow those high-power-using products to actually be distributed to users.
The whole while, of course, people will be whining on forums about how power companies have already laid out the cable, and how the marginal cost of power is effectively zero at some points during the day, and how unfair it was for the power companies to take away the unlimited plans; and, when a representative from the power company points out that it was a mistake, he will be lambasted.
[+] [-] cbsmith|14 years ago|reply
Here's my post on + about it: https://plus.google.com/117025825144195468236/posts/KEj5e3nk...
[+] [-] ivankirigin|14 years ago|reply
[+] [-] anonymoushn|14 years ago|reply
[+] [-] Karunamon|14 years ago|reply
[+] [-] radishroar|14 years ago|reply
[+] [-] jbverschoor|14 years ago|reply
Maybe PAYMENTS????
telcos suck.. lets start one
[+] [-] ludflu|14 years ago|reply
[+] [-] jrockway|14 years ago|reply
[+] [-] diminish|14 years ago|reply
[+] [-] j45|14 years ago|reply
[+] [-] tylerlh|14 years ago|reply
[+] [-] astrodust|14 years ago|reply
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] j45|14 years ago|reply
[deleted]
[+] [-] loverobots|14 years ago|reply
Your business model is ripping people off, I hope you die of insomnia (not literally). Phone bills have skyrocketed in the past 5-10 years as everyone has a cell and as salaries more or less stay the same. Let's not even talk about customer service.
[+] [-] qq66|14 years ago|reply
For what it's worth, if you want to use your phone in exactly the same way you did 10 years ago (occasional short voice calls), you can do it much cheaper today than then, with a TracFone.