Blog Post

AT&T Data Plans' Biggest Losers: Femtocell Users

Smartphone user outrage over AT&T’s (s t) new capped data plans may be dying down, but another set of consumers could soon get fired up: femtocell owners. According to the AT&T femtocell product service agreement, “Normal charges apply for mobility data plans and features when using the AT&T 3G MicroCell.” Those terms haven’t changed, but the new data plans, which are now limited to 200 MB or 2 GB a month, stand to add significant overage charges to the bills of heavy femtocell users.

On paper, there’s much to like about femtocells. Akin to little cell towers, they provide pockets of solid coverage for the phones in your home. Your handset connects to the femtocell, which then routes your voice or data activities through a fast broadband connection that you provide. It’s a win-win: You get better service for your handset while the carrier enjoys more network capacity as your activities are offloaded to the Internet. The theory is sound, but as I pointed out in a GigaOM Pro report about these devices (subscription required), pricing practices are the potential roadblock.

The issue as it relates to the new, limited data plans is summed up nicely by Michelle Donegan of Light Reading: “For consumers, the femto price model means that they will pay AT&T for the Microcell to get better indoor 3G coverage, pay for the backhaul connection to AT&T’s core network, and pay AT&T to use that indoor 3G base station.” Worse yet, if a smartphone user forgets to switch over to Wi-Fi and begins to use 3G and the femtocell for data services, the data used counts against the now-limited smartphone plan. Which means there could be no mobile broadband data left to use where that user needs it most — outside of the home.

While AT&T MicroCell customers can easily avoid this problem by using Wi-Fi for data on their handset at home, not all of them will. I think there’s a better solution and it starts at the top: AT&T should stop counting data use against a customer’s plan when the handset uses a MicroCell for data. The handset’s 3G radio never touches AT&T’s wireless network, and both voice and data traffic is routed through the broadband connection a customer is already paying for — which may or may not be provided by AT&T. There’s no justification for the double-dip charge.

As I said last year when AT&T began to roll out the MicroCell offering, you’re paying the carrier extra money each month because they can’t provide you service that you’re already paying for. Back then, I thought the situation was bad as it could be, but apparently I was wrong.

8 Responses to “AT&T Data Plans' Biggest Losers: Femtocell Users”

  1. Per-Ola

    The FemtoCell offering would be a “killer” if:
    1. Free/unlimited domestic calling from home
    2. Competitive rates for international calls (a la Vonage)
    3. Unlimited 3G data (for the reasons in the article)

    I would pay a small monthly fee to stay entirely on the iPhone (or other device), but for now it makes sense for us to keep subscribing to Vonage’s services in addition to AT&T Mobility’s.
    AT&T could kill Vonage by being a tad more innovative on the pricing side – and increase the “stickiness” of their services as well – beyond being locked in to a contract.

    • Josh, Verizon’s femtocell service may use the same terms, but Verizon also offers unlimited 3G data with smartphones for $29.99, so there is a difference due to AT&T’s limited data plans. Put another way: an AT&T femtocell user stands a far greater chance to have data overages in this situation than a Verizon femtocell user.

  2. I’m not sure if data is included in “unlimited”… but it shouldn’t matter. You have to have internet for microcell right? And if you have internet you almost certainly have wifi. So… um use your wifi for data. That’s what I do.

  3. I just bought an AT&T MicroCell (that’s what they officially call it) and I think you’re misinformed about the pricing. There are 2 pricing models:

    1. You just buy the unit and don’t pay anything extra monthly. In this case, the minutes and data count against your plan as normal.
    2. You pay $20/month for unlimited usage and the minutes don’t count against your normal plan. I’m not sure about data, but it sounded like that was unlimited as well.

    Overall, I find that to be a fair set of options.

    Finally, you raise a concern that many users will “forget to switch to wifi”. I don’t think that’s the case at all – every device I’ve ever seen “prefers” wifi and will intelligently use that option if its available and prompt the user when new wifi networks are available.

    Right now I’m a happy MicroCell user.

    • Joshua, thanks for the thoughts. As I understand it, neither of the options you mention cover data; they only apply to voice minutes. AT&T’s TOS for the MicroCell (quoted in the post) appear to validate my thought.

      You’re correct in that most modern devices will “default” to Wi-Fi over 3G if there is an available connection. But to save on battery life for a handset, it makes sense to turn off the Wi-Fi radio if you know you’re not going to be near a hotspot. I do this for the purposes of battery savings when leaving the home, for example. Granted, I’m very aware of how to manage my smartphone, so I turn Wi-Fi back on when I get home — there’s no guarantee that others will. And if AT&T simply eliminated the counting of 3G data from phone to femtocell to home broadband, this would become a non-issue.

      • Kevin, Joshua,

        I, too, have a Microcell, and I think Kevin has the pricing right. I opted to pay the full $150 for the unit, and not to subscribe to the $20 unlimited femto calling plan. Thus, for billing purposes, MY femtocell paired with MY Comcast service affects my bill just as any AT&T tower would.

        As I understand it, any data that flows through my femto is counted as data traffic on my calling plans. The only respite is the fact that, currently, all my plans are unlimited. That, however, is likely to change for some of my handsets in the future.

        Anyways, as for Wi-Fi, I’d rather leave it off entirely. In fact, that was one of the main advantages of the femtocell – that I could count on a reliable 3G data feed in my home that didn’t require switching Wi-Fi (a pain) and didn’t suck up my battery.

        Also, since Wi-Fi is such a power hog, Wi-Fi in most smartphones (Nexus One, 3GS) turns itself off with the screen to eliminate power use while the phone is in standby mode. That means when you pick up your phone, it is not up to date with mail or news apps. You need to wait for Wi-Fi to switch on, connect, and download. That goes against the “instant satisfaction, always-on” requirement of smartphone use. Forget Wi-Fi, I put in a femtocell to avoid this!

        Will AT&T fix this double-dip pricing for femtocell users? Probably. One of the problems is that femtocell users are such a small minority that AT&T’s pricing decisions aren’t prioritized around making their femto users happy. The rationalization of femto pricing will probably lag the bigger iPhone issues. I would expect them to revisit this sometime around the anniversary of the femto launch at the latest, but that’s just guesswork.

      • Verizon is just doing this to game the system for a bit. They’ve already said quite publicly that they will eventually move to usage-based pricing. I’m not a fan of the pricing on the femtocells but Verizon is just desperately hoping for anyone they can shake loose from an iPhone.