So AT&T has just axed unlimited data plans for iPhone & iPad, replacing them with ever so slightly cheaper (by $5) plans capped at 2gb.
You can argue that this doesn’t affect that many people, that most people will pay less and be fine, but I think the more interesting angle is how this reveals how AT&T just does not understand user experience the way Apple does. With unlimited data, you can whip out your phone wherever you are and use it. You never have to worry about your data usage, ever. Because you don’t have that barrier, you use the phone more. Because you use the phone more, you’re going to buy more apps and tell your friends, and they’ll buy phones and apps. It creates an ecosystem of consumption where everyone wins.
But now? Now you’ll be tempted to go look at your usage before streaming that movie. Now there will be a psychological barrier, however small, that makes you think twice about using your phone. More friction in the user experience. What Apple understands is that this friction, no matter how small, is an impediment to using the device, and they seek to eliminate as much of it as possible. AT&T either doesn’t understand or doesn’t care.
I have a rule of thumb, which is: Any deal, no matter how good it may seem to you, is usually more beneficial to the offerer. For example, how many times have you been offered 15% off your purchase if you sign up for a store credit card? I guarantee that they make the offer because they know that they will more than make up that one-time 15% on recurring fees, interest, and profit from purchases made with the card.
There’s just no way AT&T would do this unless they made money by doing it. Since they’re cutting the cost of the plan, you know they’re going to make that up somewhere. There are 6.4 million active iPhone users in the US, which adds up to $32m in lost revenue at $5 less per user.
Where do you think they’re going to make that up? Some of it is going to be in overages, though AT&T is more reasonable than some. But I’d wager that a big part of it comes from the recently announced ETF hike, which nearly doubled for iPhone users.
The only bright side to all this is that it seems like they’re telegraphing and end to iPhone exclusivity. They’re lowering the cost of staying slightly and significantly taxing the cost to exit, which suggests knowledge of a user exodus and an attempt to prevent it.