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AT&T CEO: Unlimited data was a mistake, iMessage a threat

updated 01:09 am EDT, Sat May 5, 2012

Most tiered data users going for top options

AT&T CEO Randall Stephenson shared some thoughts on his relationship with Steve Jobs, the iPhone and the way the device continues to shape his company during an on-stage interview at the Milken Institute's Global Conference earlier this week, reports The New York Times. Among the revelations was his view that the early "unlimited" data model was ultimately a bad idea, and that messaging systems like iMessage that bypass SMS plans are "disruptive."

Stephenson was of course speaking on both topics from the point of view of a person who's job it is to capitalize on data usage. At least in hindsight, Stephenson referred to the original unlimited data plan as "a regret" and said he would have preferred that heavy users pay more for it rather than having light users subsidize the heavier users. It could be argued, however, that the unlimited offer enticed users into buying smartphones and data plans who might not otherwise have done so.

Introductory offers are often sold as a loss leader to get customers used to a level of service they will have to pay more for later. The company has since moved away from unlimited data and now says that 70 percent of the people who are on tiered data plans tend to the more expensive options. In the previous quarter, AT&T reported that $6.1 billion of its revenue was from mobile data alone.

Stephenson also saw other services, including specifically iMessage and Skype's messaging capabilities, as threats to AT&T own SMS messaging, which is a major profit center for carriers, as the service runs entirely on "overhead" bandwidth that costs the provider little. "If you're using iMessage, you're not using one of our message services, right?" he asked the crowd. "That's disruptive to our messaging revenue stream."

While text messaging is still growing in the US, the rate of growth has slowed. Messaging in other countries has started to decline in favor of other systems, including iMessage, Skype and most recently Facebook, which just updated Facebook Messenger to do SMS-style messaging on mobile devices.

"You lay awake at night worrying [that services like that] ... will disrupt your business model," Stephenson said.

Despite the comments about iMessage, he was upbeat on the decision to have taken on the iPhone originally, despite the way it "disrupted" the entire cell phone industry. He related a tale about Stan Sigman, who was chief executive of Cingular at the time, coming to the AT&T board to talk about "a unique opportunity."

Sigman convinced the board to go with Apple's plan, even though Sigman himself had not even seen so much as a picture of the device at the time. The board was intially nervous about the decision, as the executives were aware that it would transform the company's entire business model.

"I remember asking the question: are we investing in a business model, are we investing in a product, or are we investing in Steve Jobs?" Stephenson said. "The answer to the question was, you're investing in Steve Jobs." [via The New York Times]



By Electronista Staff
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Comments

  1. Grendelmon

    Mac Enthusiast

    Joined: Dec 2007

    +90

    Awwww

    We're all so sorry that alternatives to the SMS money scam dipped into your revenue...

  1. UmarOMC

    Fresh-Faced Recruit

    Joined: Aug 2001

    +33

    Look at that sour puss...

    Can you guess where the stick is...?

  1. ryanjo

    Fresh-Faced Recruit

    Joined: Oct 2001

    +45

    Saved your sorry a**

    The iPhone saved AT&T from being another T-Mobile in the face of Verizon's superior connectivity and capacity. Take some of that SMS money and build a few towers. Does not have a clue why his company sux.

  1. joe7911

    Fresh-Faced Recruit

    Joined: May 2012

    +40

    Stop crying, Get productive and inovate.

    Instead of worrying of what you may loose to new technologies. Get productive and innovate better, faster services. Cheaper packages. That in the long run will generate you more income and be an industry leader not a follower.
    Cellular service is very expensive and people are looking for ways to save money. You should bring back unlimited data and add certain restriction for the hogs. this will get you lots more business.
    What you loose on a few you will make in the large volume.

  1. Paul Huang

    Mac Enthusiast

    Joined: Sep 1999

    +5

    AT&T was destined to be

    Apple's and iPhone user's b**** and they didn't even know it. Now AT&T is a captive audience.

  1. Stuke

    Junior Member

    Joined: Feb 2005

    +21

    Yet Sprint CEO...

    ...gives his personal compensation back to company to fight for continued customer loyalty on the iPhone craze wave. I wonder which network wants to be a customer service organization.

  1. facebook_Dana

    Via Facebook

    Joined: May 2012

    +29

    Interesting

    There's not one single comment about how to make their services more attractive to new customers or how to better serve current customers. It's all about how much can we squeeze out of people while offering as little as possible. AT&T Sucks.

  1. DaJoNel

    Fresh-Faced Recruit

    Joined: Aug 2010

    +6

    AT&T

    Reliable, but full of @ss.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +29

    Cheapskate mentality

    Randall also said this, and it is an exact quote:

    "Every additional megabyte you use in this network, I have to invest capital."

    He thinks investing in AT&T's network is a bad thing.
    Well it certainly shows.

  1. davesmall

    Fresh-Faced Recruit

    Joined: Oct 2006

    +13

    Wrong headed

    Always looking for ways to deliver less value to customers at ever higher prices. In other words, a typical carrier.

    What's needed is some real disruption in that industry. Plesae give us a carrier that will sell chunks of data without a contract or expiration. Stop charging separately for SMS and voice minutes. It is all data so one charge for data should be sufficient. Users should be able to purchase 30 gigabytes for $30, as an example, and then buy more whenever that 30GB is used up. There should be no monthly expiration & renewal as is now the case with the iPad prepaid plans. That would fix the badly broken system that we suffer now in America. After that fix, the disruptor needs to start working on an international fix that eliminates roaming charges entirely.

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