Nick Greif | More than just dropped calls

Last week, AT&T; announced that it is dropping its $30 “unlimited data plan” and instead will offer tiered plans priced at $15 for 200 MB or $25 for 2 GB per month. This decision comes as a result of a small number of customers streaming massive quantities of music and video to their Smartphones, consuming a large amount of data each month and almost single-handedly slowing down AT&T;’s entire network. According to AT&T;, most consumers will save money from this change since only 2 percent of users exceed 2 GB each month.

However, though tiered plans are arguably more fair, they entirely miss the point. As Giorgio Galante, an AT&T; customer, astutely pointed out in the e-mail he sent AT&T;’s CEO (which achieved notoriety when AT&T; threatened to take legal action if he contacts their CEO again), “I may not use 2GB/month today, but the point of these devices (iPad 3G, iPhone 4G, etc.) is that we’ll be able to do more and your network … can’t handle it.”

In what is a rapidly evolving technological field, consumers expect to have the full power of a computer at their fingertips. Although I currently do not download 2 GBs of data on my iPhone, I consume much more than that on my laptop. I am also consistently doing more of the things I used to do on my laptop on my phone, such as getting driving directions, browsing Gilt and streaming Pandora. Logan Steinhardt, a rising College senior, is a perfect example of this trend. He noted that he uses his iPad on AT&T;’s 3G network to download content from his Netflix account. Of his daily data usage, Steinhardt said, “Even if I’m not watching a movie every day, I’ll watch a TV episode or two.” Pretty soon, like Steinhardt, we will all be consuming more than 2 GBs a month on our mobile devices, whether they are Smartphones, tablets or eReaders.

This leaves AT&T; with a choice. They can either dramatically expand their network’s capacity as consumer demand increases or cede the mobile industry to the internet, like so many other dying technologies. During Google’s 2010 I/O conference, keynote speaker Vic Gundotra exemplified this when he showed that from 2004 to 2009, time spent listening to the radio was down 18 percent, reading newspapers was down 17 percent, reading magazines was down 6 percent and watching TV had flat lined. The punch line: Time spent on the internet had grown a massive 117 percent.

This trend should matter to AT&T.; Though a National Pew Global Attitudes Survey published in January reported that over 80 percent of Americans own mobile phones, nothing says they must be used on traditional mobile networks. Data is often transferred over 3G networks, but Steinhardt noted that he finds WiFi the fastest way to connect while he’s at Penn. The growth of wireless internet in metropolitan areas — like Clear’s WiMax in Philadelphia, which provides citywide connectivity — will directly compete with mobile carriers’ data networks and lead users to trade in data plans in exchange for wireless providers.

Further, the rapid advance of Voice Over Internet Protocol (VOIP) — the technology Skype uses to host phone calls through the internet — means that with a strong WiFi connection, a consumer would not even need a traditional network for data or phone calls.

So once a wireless internet carrier permeates the United States, consumers will be asking AT&T; and other carriers: What stops us from buying a phone and using wireless internet for both our phone calls and data?

Give it another five years and I still don’t think they’ll have an answer, but by then it won’t matter.

Nick Greif is a rising Wharton senior from Los Angeles, Calif. He is the chairman of the Nominations and Elections Committee. HIs e-mail address is ngreif@wharton.upenn.edu.

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