The AT&T Debacle – A Cautionary Tale

April 12, 2009

A few days ago, AT&T announced the specifics on a trial of their new pricing program, and, in true AT&T fashion,  continued their rape the American consumer in another attempt to keep us in their profitable technological dark age. I suppose that may be a little harsh, but hey, I am not so happy right now. I’m sure you will forgive me my moment of rage. So what is their new, creative pricing plan? Make you pay more (a lot more, of course) to get the service you have today.

Apparently, AT&T has decided that they are tired of people’s access to “unlimited” broadband services (godless freeloaders), so they have decided to start running trials in which users are charged by the gigabyte for Internet access. What this essentially means is that without any discernible increase in the cost of providing their service, they have taken it upon themselves to greatly increase the cost of their service to the average consumer. To get the same unlimited access that you’re paying 20-35 dollars a month for now, you will have to pay (at least) 150 dollars to AT&T for in the future. Let me repeat that: AT&T is implementing a 500% price hike for no apparent reason. Well, other than greed, that is.

Now, to be fair, AT&T has put forth a few arguments on why this price hike is necessary. The first and foremost among these arguments is that people are actually using the bandwidth that they paid for. And they can’t have that. They first tried to bump up their profit margins again by trying to force web companies like Google and Yahoo to pay more for all of their web traffic to be prioritized , a potentially disastrous proposal for the internet as a whole, and a definitive death blow to the cause of net neutrality. Unfortunately, the do-nothing attitude of Congress rejected the net neutrality bill that would have prevented such a thing from taking place, but at least Congress restrained itself from making the telecom’s brilliant idea law. Because of this setback, the AT&T and the telecoms were forced to go back to the drawing board. Looks like they’ve decided that if they can’t take from the provider side, they’re going to take from the consumer. And they want it all.

The second most quoted reason for the price hike is much more sickening, however. AT&T has gone around proudly declaring that they need the money to keep pace with technological innovation, so as to continue to provide their customers with “superior service.” Hrm…you mean like the $200 billion dollars in taxpayer money you and your telecom buddies were given back in the 90’s to achieve the goal of 86 million U.S. homes with symmetrical 46mbps internet connections by 2006? Or was that not quite enough for you? While they’ve sat counting the money they robbed from the American people, we have quickly slid from 1st worldwide in broadband penetration to 25th. And please, spare me the “we’re too large of a country, Japan has it so easy” rhetoric. In case you didn’t realize, Japan is a country  about the size of California, and I don’t think that ANY Californians have yet to be blessed with the 100mbit/s internet connections that most Japanese citizens enjoy. Oh, and telecom companies? I’m still waiting for my $2000 refund check (or, preferably, my faster internet connection). And don’t think I’ll forget.

Their third line of reasoning is just silly. AT&T argues that because it worked in Europe (an arguable point) and on cell phones (a ridiculous point), it should now be the rule rather than the exception. I can’t help but wonder at how they decided that Europeans liked paying more for their internet connections. My guess is that their definition of “worked” is that people didn’t storm their corporate offices with pitchforks. Well, either that or the entire continent is comprised of masochists. You can decide which is the more likely scenario. But believe me, if I or any of my friends could have an unlimited 3G connection that didn’t cost an arm and a leg, we would subscribe in a heartbeat. However, providers just will not do that, regardless of the MASSIVE consumer interest in such a service. Why? They make more money per kilobyte when they charge by the kilobyte than when they give people an unlimited pass. It has nothing to do with need, or an increase in traffic, or a better way of thinking about providing internet service for consumers. It is about them padding their already enormous profits with more of your hard earned money.

I mentioned in the title of this post that this was a cautionary tale. I want to clarify what I mean by that. First, I want to caution the American people: if we continue to let the large corporations in this country dictate the progress of technological innovation for their own gain, we will fall further and further behind the rest of the world. Technology, with all its benefits, has made this country the great place that it is, and to let that slip away for the short-term profit of a wealthy few would be one of the worst decisions that we could make. The hard economic times that we are now in would devolve into something much worse without our technological upper-hand. Second, I want to caution the telecom companies, specifically AT&T: be careful on the ground on which you tread. You’ve already been lucky so far that the U.S. government has not taken action against you for your monopolistic business practices now and your blatant fraud back in the 90’s.  Price gouging your customers to the point of ridiculousness while simultaneously stealing their tax dollars is not going to win you any friends. Eventually, your misdeeds and lies will come into the public light (probably after you pushed peoples’ pocketbooks just a bit too far), and people will be calling for heads to roll. When that happens, you’re going to need all the friends you can get.

</rant>

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