AT&T’s (s t) Ralph de la Vega used today’s UBS Global Media and Communications Conference in New York to deliver a message to the carrier’s data-hungry mobile users: We will have ways of modifying — or monetizing — your behavior.
Noting that roughly 3 percent of AT&T users generate 40 percent of the traffic on the network, de la Vega spoke of offering “incentives” to get users to curb their data habits. Those “incentives,” though, may come in the form of stiffer fees or higher changes for downloading information during business hours — what’s known as congestion pricing for mobile broadband.
“I’m not going to give you in detail what we’re going to do, but if three are causing 40 percent, then we’re going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage so they don’t crowd out the other users in those same cell sites,” de la Vega said. “You’ll see us address that more in detail in the future…What’s driving usage on the network and driving these high-usage situations are things like video or audio that keeps playing around the clock. We’ve got to get to those customers and have them recognize and change their patterns.”
As Stacey wrote a few months ago (GigaOM Pro, sub. required), a combination of attractive price plans, high-quality smartphones and the rise of mobile applications are already driving mobile broadband usage — in a big way. Much of the traffic is due to streaming content such as web-based video and on-the-go music services that require far more bandwidth than things like text messaging and mobile e-mail. And that consumption will surely continue to surge as netbooks and a flood of other connected devices come to market, and as the fatter pipes of LTE make accessing content even easier and faster.
Indeed, de la Vega this morning said that simply boosting capacity on AT&T’s 850 Mhz network in New York resulted in an “overnight” traffic increase of 30 percent. AT&T’s woes are a prime example of network shortcomings, to be sure, and the carrier is scrambling to appease data-hungry users by upgrading its 3G network to HSPA en route to the 4G technology LTE. But other operators are certain to experience such growing pains as they grow their data businesses with iPhone-like handsets.
Carriers are increasingly turning to technologies like Wi-Fi and femtocells to help offload the increasing traffic, but operators will likely also abandon their flat-rate pricing models in favor of congestion pricing. A consumer who uses mobile data primarily for email on the phone, for instance, could opt for 200kbps service while a netbook-toting road warrior could be asked to shell out for a 1.5Mbps connection. And connectivity could vary not just by user but also by use case, giving consumers the flexibility to pay more when they need a lot of data quickly or during peak hours. Cable operators and a handful of European ISPs are already toying with such models.
Congestion pricing has some substantial drawbacks, of course. Charging consumers based on a host of variables is a marketing strategy destined to foster confusion in the minds of users, and it could force carriers to make upgrades to billing infrastructures to ensure users are billed accurately. But with mobile data already straining the capacity of some operators’ networks, it’s a model you may see sooner than you expect.