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Thursday, May 5, 2011

AT&T broadband cap gets a consumer wag-of-the-finger

AT&T made news this week by announcing a cap on broadband for personal internet use. Based on my own (purely unscientific) review of the comments circulating through social media sites, the move wasn’t favored by consumers.

From Twitter:

JD_Wright: Broadband cap? I think our days with AT&T for internet service are very limited.

Joel_Turnipseed: @att added a cap and didn’t lower price, this is why I have moved internet providers "att capping broadband http://t.co/u9YrKmi"

kevinlam14: AT&T cap broadband usage! 150gig for DSL and if you go over, $10 is charge for another 50gig
http://ow.ly/4NAAs This is a load of crap!

beermonkey: Time to switch providers out of principle alone. RT @News4WOAI: AT&T putting cap on broadband
http://bit.ly/mGoiqT


But before committing to indignation about how this is a money extracting move by an evil cable company who doesn’t want to provide the service it’s loyal customers, consider this as a move that potentially protects the service experience.

According to AT&T, the top 2% of customers – those for whom the cap will apply – use a full 20% of broadband.

When one customer’s service experience adversely impacts the service experience of other customers, the company has a decision to make – protect the experience for the customer whose use is negatively impacting others, or intervene to protect the experience of the many.

In some cases, the decision is easier than others.

If the customer is improperly using a company’s service experience – think of a severely intoxicated passenger on an airplane – the difficult but appropriate response is often to remove them from the service environment, to be served in another way or not at all.

On the other hand, if a customer simply uses “more than their fair share” of the company’s service capacity, the company has the option to charge for the capacity-draining use to either modify the behavior and bring capacity use back into balance or ensure any continued extreme usage of the service is compensatory.

The AT&T cap on broadband (which isn’t a cap, as much as a charge for excess use) isn’t without precedent. In fact, it is somewhat similar to the intelligent traffic system IBM implemented in Stockholm, which concurrently solved a major congestion problem while increasing municipal revenue and was ultimately seen as a creative solution to a difficult problem.

What is interesting to me is that while both organizations made changes to preserve scarce service capacity to serve more customers more effectively (and make more money doing it), one is met with case studies while the other is met with catcalls.

2 comments:

TrustAvidity said...

I understand the caps to smooth out their network for all users, but a degradation of service without any kickback or bill cut is just plain wrong. Also, if they're seriously doing this solely for quality of service issues and not to screw over customers then they should only cap it at peak times. Congestion isn't a problem 24/7. It could be like cell plans... capped at peak times but unlimited nights for example.

Chris Reaburn said...

You bring up a great point. The AT&T solution is a bit of a "blunt instrument" in that regard.

It is simple enough to get extreme-usage customers to modify their behavior or be compensated for it, but it only allows for two choices - reduce your usage or pay the price.

A much more elegant solution would allow them to modify their behavior by using just as much as previously, but in times of off-peak demand.

That solution would likely be more difficult to define & explain, but may ultimately be more effective.

Two additional elements have to also enter into the discussion at this point - fairness and trust.

Is AT&T being providing a fair process and fair outcome to its service users? I believe it is, but I'm not one of the targeted users. I can see it as an act that balances network performance of all by adjusting the behavior of a few. That said, one of those users may instead see it as the screwing of their most loyal customers. Your solution would likely make the outcome even more fair than what they implemented, though it would shift the burden of managing the program to AT&T. I have no problem with that, but they might.

The other issue here is trust, in that some companies have built up enough trust with their consumer base to unilaterally change their customer contract and still have customers trust that they are acting in their best interests.

Southwest Airlines is one example. Imagine they announced tomorrow: "we've done the math, and flying lapchildren are diminishing the experience for almost every flight they're present on. We still want those customers, but we're an airline built on low cost, and lapchildren make us less of that than we want to be. To compensate for that, we're instituting a $25 fee for every lapchild to offset what we see as a slight delay associated with them. Remember, your bags fly free, because checked bags represent operational efficiency. Lapchildren, we now charge for."

Southwest has a long enough history of low cost in their DNA, and they have, over time shown that their low cost strategy has customer benefits in the form of lower fares. I think that most customers would trust Southwest in making this decision.

But AT&T - and almost any telecom for that matter - faces a trust deficit that I think is more difficult for them to overcome. Most customers have a horror story in their past, and have not consistently demonstrated that any action on the customer experience side benefits their customers at all.

That's where the long run actions of a company come back to haunt them. AT&T may be doing the exact thing that will benefit the broad majority of customers, and it's very possible that those customers don't trust that. Of those commenting on social media sites, it is possible / likely that few of them would be subject to the cap, yet because they don't trust their provider, they still see this as a reason to take an attrition action.