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.

...but you can choose your business partners.

I wonder if AT&T is feeling the heat.

The best thing to happen to the company in years – exclusivity on a consumer market phenomenon – is breaking the back of it’s ability to deliver on service promises.

First the network problems and the complaints about service coverage. Then the 2GB data plan limit following shortly after the iPad release, effectively decreasing its experience value. Then the botched support on the iPhone 4 release, including inability to fulfill demand for the phones, inability to process orders, inadvertently cancelled orders and unintentionally shared private consumer information.

You have to wonder is AT&T isn’t considering asking Apple to introduce another provider (a competitor), just to prevent a complete service failure. Too much demand is a good problem to have, unless your business is a network-based service, and that demand is both abundant to the point of damaging the experience and comes at a pre-negotiated rate.

I also wonder if Apple feels like it has lost control, and a once-in-a-generation opportunity is being limited by a partner of their choosing.

Most complex services need networks of business partners and intermediaries to manage delivery. Whether it’s iPhone service or the fulfillment of online retail purchases to your home, most businesses put a portion of their customer promises in the hands of someone else to fulfill.

I don’t know specifics on where issues lay between Apple and AT&T, but I have to believe Apple is not seeing their vision of quality & consistency fulfilled by their exclusive partner.

While the selection process is critical (and it is possible that this is where Apple failed) the day-to-day management is much more important. Conflicts are certain to arise over objectives, performance, costs and rewards.

The easiest way to resolve these conflicts is the mundane stuff that most innovators don’t want to suffer through – establishment of expectations, measurement & review of performance – these are key activities businesses should must employ when using another party to be their face to the customer, or even a part of promise fulfillment.

If these are insufficient, sometimes the service owner has to engage more – helping the intermediary provide service the way they expect through standards & training on what it means to serve the customer in their intended. In extreme cases, they may even have to front service enabling technology to make the relationship work (or in Apple’s case, prevent it from failing).

It probably seems unfair that Apple may soon get to the point where it has to invest its own resources in the development of AT&T service capabilities, perhaps even going so far as to own a part of the network

But fairness doesn’t matter when you’re talking about the detrimental impact to the brand that stands on its flagship product that right now is dangerously close to falling far short of its ability to deliver on its substantial promise.

Arguing over “Adequate”

I don’t know which seems sillier – Verizon launching their national holiday ad campaign differentiating on the strength of a table-stakes service attribute, or AT&T going to the trouble to sue them over their representation of it.

Verizon is actively promoting their nationwide 3G coverage and pointing out a perceived weakness in the 3G coverage of AT&T, who has sued them in response, claiming “their use of white space in their advertisements misleads people into thinking that AT&T offers no coverage in most of the country."

Does any of this really matter?

Plotted against population density, the two networks are within percentage points of each other in terms of coverage.

Further, “coverage” isn’t a service delighter, or even representative of customers’ desired service. It’s an indicator of available service alternatives, or an identifier of adequate levels of service. If you have the coverage, you’re in the consideration set. If you don’t, you’re not. The more alternatives customers have, the higher the level of expected service.

For most consumers, this conversation is about nothing.

It’s easy for network-based services (airlines, cable, shipping, telecom) to focus on coverage, mostly because it is operational and tangible.

But of all the complaints people have about their wireless service providers, 3G coverage represents a minority. Follow either Verizon or AT&T on Twitter for half a day, and you’ll get an idea of how important 3G coverage is to consumers, compared to the themes of my phone doesn’t work / I can’t get the plan I want / my bill is never correct / I can never get through to a customer service agent that can fix my problems. I have yet to see, “I’m in the Tetons, and can’t get 3G coverage!”

By focusing on network coverage, Verizon & AT&T neglect the service their customers desire, and focus on who is doing a better job delivering on what is adequate. When adequate is the goal, I don’t wonder why churn rates in telecom are among the highest in any industry.