AT&T Mobility prez does damage control -- but doesn't rule tiered pricing out

When we last heard from AT&T Mobility President Ralph de la Vega, he was saying that AT&T needed to give data users an "incentives to "reduce or modify their usage." Virtually everyone -- myself included, as I've been predicting it for a while -- assumed that these "incentives" would take the form of tiered financial penalties for heavy users or tiered data plans based on data usage (which amount to the same thing), because really, what else does AT&T have to hang over your head to get you to change your behavior? Well! Since that all came out, de la Vega has been making the rounds, explaining that, of course, no, he never intended to imply that AT&T would be doing tiered data prices -- while at the same time not actually ruling out tiered data prices. Here's how he does this dance in a BusinessWeek interview: "There are things people say I said that I didn't say. We have not made any decision to implement tiered pricing." (Note that he didn't just come out and say "We're not going to implement tiered pricing.")

Still, I'm sure AT&T is quite aware that tiered pricing will be anathema to customers, especially new ones -- people like the freedom of not having limits, even if they'll never come close to meeting their quota. Thus, the company does seem to have some intermediary ideas. They're making deals with companies like McDonald's and AT&T to offer free Wi-Fi from hotspots in those restaurants. But even with the improvements in iPhone OS 3, signing onto a hotspot where you need to agree to some kind of terms of service is a pain, and the performance improvements generally aren't so great over 3G connectivity that you'd definitely jump through the hoops. AT&T is also planning to roll out femtocells -- small 3G wireless cells that connect to your home Internet connection and produce an improved bubble of cell service that operates over the Internet rather than AT&T's own backbone. But those femtocells will cost money, and why would consumers shell out? Sure, it'll improve their service -- but most users will resent spending their own money to get services like voice and data that they thought were part of their original package.

There's already hints that AT&T might spend much of its energy going after the same small majority of high-data users that cable systems like Comcast have been involved in a guerilla war against. There's a quote in that BusinessWeek article from analyst Craig Moffett: "It's reasonable to think that heavy users are worth zero" in financial terms. My guess is that we will see tiered pricing -- but the tiers will be something like my home state of Maryland's tax code. While Maryland theoretically has a progressive tax system (meaning that people who earn more money pay progressively more income tax), the higher rates don't kick in until $150,000 for individuals -- meaning that the huge majority of people pay a flat rate. AT&T may keep billing their service as "unlimited" but slip some kind of heavy usage surcharge in the fine print. Let's hope it's not too fine to be unfair.

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