On Sunday, AT&T is reconfiguring its mobile data plans in a way that will anger many customers but may actually please others. It’s raising its smartphone and tablet data plan rates, while simultaneously offering customers a better deal on the data they do consume. Its 200 MB and 2 GB are plans are going away for new subscribers, replaced by a plan with 300 MB and a plan with 3 GB. The bottom line is all new customers will pay more every month for data, but they will also pay less per megabyte.

AT&T will also offer an additional 5 GB high-volume smartphone plan for a month, which includes tethering and mobile hotspot use. For tablets AT&T will offer the same and tiers as it does for smartphones, though without tethering, and it will keep its 250 MB plan in place. The same per gigabyte overage fee will remain in effect for all of the higher tier plans, though its rather discriminatory policy toward data excess on its lowest tier plans will persist. Customers with the 300 GB will have to pay another to get another mere 30 GB. All existing unlimited customers on the old capped and unlimited plans are grandfathered in (though throttling will remain in effect for unlimited), but existing customers can switch to the new pricing tiers if they wish.

There’s a way to look at this as a positive. AT&T is actually lower the per-MB cost of data as mobile Internet and app use skyrockets. That’s a trend that needed – and still needs – to occur if operators are to keep ahead of the increasing bandwidth demands of smartphones and tablets. AT&T still isn’t as cheap as Sprint, which is still clinging to unlimited, and T-Mobile, which offers gobs of data for dirt cheap prices, but it is definitely undercutting its primary competitor, Verizon Wireless which offers 1 GB less for the same price on the most popular plan. Unless operators want mobile broadband innovation to go stagnant pricing-per-megabyte will have to fall further.

But make no mistake about it: AT&T may be smoothing over the edges but this is most definitely a price hike. Some of AT&T’s current customers may switch over the plans by choice, particularly customers that often go just over their 200 MB or 2 GB caps each month. But AT&T will be collecting more month from all new customers. That’s going add up to a hefty pile in AT&T’s coffers, and most customers won’t be happy about it.

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News about wireless bandwidth hogs, new session-based pricing from Leap Wireless and the appearance of a new web site aimed at helping consumers understand their data caps and the limits those impose, all point to a growing problem in the wireless industry. And that problem isn’t congestion. Rather, unless the industry figures out how to give people connectivity at a reasonable costs, wireless will always be luxury access technology and ubiquitous connectivity will be a pipe dream.

The problem isn’t congestion, it’s a stagnation.

A study Friday noted that the top one percent of wireless users consume half of all the data. Meanwhile, Public Knowledge on Friday launched a web site designed to help consumers understand their data caps. On Thursday Leap Wireless’ CEO said the company would begin offering data sessions in addition to its regular tiered data plans. Under that scenario a user might buy a data plan just like he would buy pre-paid minutes on an as-needed basis after reaching his cap. All these bits of news are linked by one key problem: wireless data is in high demand, but it’s also expensive to deliver.

And the tension between what consumers want from their wireless networks and what operators want to give them is leading to stories that harp on congestion, new pricing models and consumer advocacy around high-priced plans. But it’s time to stop trying to address that tension solely with new types of rate plans, and customer education. If we want wireless data to become ubiquitous and deliver on the promise of connectivity, the industry needs to address its costs and educate consumers on those costs in a transparent way.

Part of the problem is just a matter of physics — airwaves can only carry so many bits per hertz — but other aspects of the high cost are related to policy and the reluctance of the industry to embrace, or even talk about, technologies that will help them deliver wireless at a lower price per bit. Right now, sending a bit over the cellular airwaves costs a lot more money than it does to send that same bit over fiber or even DSL. How much more depends on if you are in a populated city or out in rural America (it also depends on if you are in America) as well as the type of network the bit is sent over (i.e., LTE, CDMA or HSPA). But broadly speaking it’s at least 200x more expensive to use cell networks according to analyst Chetan Sharma. He estimates that number will drop over time to 100x, but clearly that’s still a huge disparity.

Not all bits are equal (or as expensive). So let’s rethink the network.

Fortunately, not all data has to travel over the gilded cellular pipes. Smart consumers already use Wi-Fi networks for streaming video and movies, but ideally this will become more automated. This means operators must include Wi-Fi in their networks, and actively shunt certain types of traffic to those networks when available. In short, we need application-aware wireless networks that send traffic to the cheapest, but most appropriate network the application can use and the consumer will accept.

This means when I stream YouTube videos, my carrier routes me over to Wi-Fi if it’s available but my email and voice calls stay on 3G if the Wi-Fi is weak. As a consumer I would advocate Wi-Fi as the default network with carriers switching me over to a cellular plan only when absolutely necessary, much like upstart Republic Wireless tries to do. Buying cell phone plans becomes a little more complicated, perhaps involving a short questionnaire that a consumer fills out ranking what types of traffic he needs to get instantaneously versus the traffic he is willing to compromise on.

This new type of plan also means that consumers may have to accept lower quality service for streaming video, might end up paying for access to a carrier Wi-Fi network and will need to accept their operators monitoring the applications they use. There’s a role for developers here in building tools that help consumers see exactly what their operators are doing, and the FCC should stay active in enforcing the spirit of the network neutrality rules. I have a hard time believing that carriers could behave well enough for me to trust them with something like this — just look at their historical stances on Wi-Fi, or the recent questions around Google’s Wallet service on Verizon’s network, but something has to give and I don’t think it will be the operators.

We want what we want. Until we have to pay for it.

CTIA says ladies like their mobile data.

Despite the cost of wireless plans, we want and will use wireless data. On Friday, the CTIA put out a study noting how women use the wireless network for an increasing amount of stuff. And articles offering a word of caution about viewing the Superbowl on your mobile phone get that while it may make you bust through your data cap, people will watch bits of a big game on the go. That very idea was unthinkable a few years ago, but mobile has changed our surfing, shopping and even our TV watching habits.

Carriers have moved forward in delivering faster networks that can deliver between 5 and 12 Mbps down — enough for video, voice and even the most demanding web services — but their current cost models don’t match up with the usage expected and advertised on the networks they’re building. Consumers look at carriers’ pricing, their marketing (which shows customers streaming video on their phones) and their comments in the press about high costs for mobile data and congestion, and recognize that carriers are not telling the whole truth. If network resources are such a precious commodity, then why not price data so it costs more at peak times? Or why even encourage video on the LTE network?

But when will that disconnect between the ease of using a service and the high cost of that service start to change or curtail consumer behavior? In short, when will a user suddenly think, “Maybe I shouldn’t use my phone for this, right now?” In a mobile-first world, will wireless become a second-class access technology, or will carriers adapt their networks and their cost structures in time?

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Much of the discussion about Internet Service Providers centers around the nation’s largest players in the telecommunications and cable fields, but there are a number of smaller ISPs and it’s worthwhile to talk to them to discover how competition is faring in the U.S. and what might happen if more flourished. Royster Tucker, the COO of North State Communications, an ISP serving a 600-mile area in North Carolina highlighted the importance of fiber to the home, but also indicated that metered billing isn’t just for the big guys.

Fiber is the future, and North State is on board.

North State, which includes Greensboro in its service area, began deploying fiber to the home in 2009 because it was losing out to the cable companies with its DSL-only option. Tucker declined to tell me how many customers it currently has, but he says that it’s now the No. 1 provider of broadband in a region that includes Time Warner Cable and AT&T as well as smaller cable companies. “We said we want to be the broadband market leader and the way to do that late 2009 was with fiber to the home,” Tucker said.

Now North State offers an 80 Mbps down/30 Mbps up for consumers at a 12-month introductory price of a month, which is about what I pay for 12-13 Mbps down/ 2Mbps up cable broadband from Time Warner here in Austin. However, the most popular package North State sells is a 30/30 Mbps symmetrical package, although he did not disclose penetration or take rates. Tucker also noted that the company is still supporting its 10 Mbps DSL business in its service area, but he doesn’t plan on making more investments in the technology. “Back in 2003 and 2004 and 2006 we were out there shortening loop lengths, building out fiber to the node and all that, but now we’re going to stick with maintenance,” Tucker said.

To cap or not to cap? That is the question.

North State doesn’t currently have a broadband cap as Tucker believes the fiber network can withstand the speeds that today’s traffic requires. However, Tucker says, “We believe ultimately that is the direction the broadband market will go.” When pressed on the subject, Tucker says, “As over-the-top video becomes more and more prevalent and there’s more HD and bigger broadband requirements, the broadband market will move to some kind of cap or metered service.”

However he couldn’t explain precisely why this would need to happen. “The networks are expensive. We are providing bandwidth for all these wonderful things that are showing up on the Internet and that is costly,” he said. “This market is highly competitive and we have to get some money from somewhere to pay for these networks. All of it is not falling on the user.” But when asked if his financial models could support the delivery of more traffic he said that, “in a multi-product scenario, yes it does. We look at the whole household and the revenue we’re getting out of the households.”

When I asked if that meant North State could only recover costs and make money off a user that subscribed to multiple services, Tucker appeared to backtrack. A user that subscribed to broadband alone would suffice, he said. He then implied that part of the issue around capping was because some people use so much more than others. “All the rich content that’s showing up on the Internet is driving tremendous demand on our network, and we want our customers to have access to that.” He continued, “There are those that are more bandwidth-heavy users, and we need to strike a median on who’s paying for what, and that’s where we see that capping may come in.”

However, Tucker was very clear that North State wasn’t capping service now — and that it may never cap or meter service. However, one could hear the amazement in his voice when we discussed what people were doing over the network.

“I don’t think anyone could see what we would drag across these pipes, and people thought the unlimited model would be fine,” Tucker said. “But this is evolving and it’s something that we’re all having to deal with. We’re a broadband company and we want people to do what they want to do, and we want to deliver value to our shareholders.”

As people consume more bandwidth, it may well be smaller ISPs such as North State that are answering to private shareholders in highly competitive markets, that show us exactly what networks are capable of, both in terms of technology and in delivering profits.

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The days of all-you-can-eat internet could be coming to an end. Better get your streaming and downloading under control now.

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AT&T said that its average DSL subscriber only uses 18 GB of data per month when it announced its 125 GB cap earlier this year, and the company’s spokesperson Mark Siegel even called the caps “generous.” But new data published by network management specialist Sandvine this week might make one question the company’s rosy take on its bandwidth caps.

Sandvine said in a special report titled Netflix Rising (PDF) that the average Netflix user consumes about 40 GB of bandwidth per month. However, consumption seems to be much higher when Netflix is consumed with a connected device capable of receiving HD streams. The company singled out owners of Microsoft’s Xbox 360 in particular: Users that stream Netflix through their Xbox 360 consume about 80 GB of data per month on average.

Unfortunately, we are not just talking about a few heavy gamers with Netflix co-dependencies: Around 25 percent of all Netflix traffic is consumed through the game console, according to Sandvine, with 33 percent of all Xbox 360 game consoles being used to stream Netflix content. One has to wonder how many of those Netflix-loving Xbox owners are poised to hit AT&T’s bandwidth cap with their next movie marathons.

Sandvine also compared Netflix traffic to other sources of bandwidth usage, pointing out that the video subscription service now uses close to 30 percent of North America’s peak bandwidth, surpassing BitTorrent as the largest source of data traffic in North America.

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Novatel 2372 MiFi owners could always stream tunes from the web, but now they can do it from microSD — after downloading Maintenance Release 1.0, that is, which finally brings DLNA server functionality. DLNA support means your mobile hotspot can share music, video and other content to devices over the network from an inserted flash card, even when the router can’t serve up 3G — especially useful on AT&T devices, which, you know, tend to suffer from occasional network congestion and data caps. The update also includes a new Customer Care Widget and a more intuitive MiFi OS web interface, so even average consumers might be able to configure one of these without consulting tech support. Sounds like a win for everybody.

AT&T’s MiFi 2372 gets DLNA update, streams media even without 3G connectivity originally appeared on Engadget on Fri, 22 Apr 2011 02:52:00 EDT. Please see our terms for use of feeds.

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