Paying the Price of Mindless Optimism

AT&T surprised nobody and angered everybody (or at least almost everybody) when they announced that they were now imposing metered usage on all unlimited-data plans at specific cap rates per month.  The announcement comes just as the MWC show ends, a show that seemed more interested in promoting new things to do with cheap bandwidth than in addressing the inevitable—carriers strapped for ROI impose speed brakes or usage pricing plans.  Usage pricing for some wireline users was also announced this week—TW is trying it for lower-usage subscribers but it’s pretty certain it’s going higher.

If you read some of the news pieces out of MWC the disconnect here is striking.  There’s a story about how startups are jumping in to offer free or ad-sponsored texting to smartphone users to compete with paid SMS.  One such company said in effect that bits were going to be like water and you don’t charge somebody for a drink.  There’s a proposal that users will stream concerts to their friends (how do you feel about that, artists and promoters?), and there’s a quote that users by 2020 will consume a gig a day over mobile networks.  Cisco has been preaching hockey-stick video traffic growth for years.  Since AT&T imposed their caps at the 3 or 5 GB/month level, this all seems a bit of a stretch, don’t you think?

We’re suffering from a kind of moral consumerism; what I want is fair and logical if everyone else agrees it is, objective reality notwithstanding.  We saw that at MWC, and we see it with every story on the Internet, in every analyst brief.  This of course only further socializes the unreality; it’s the classic “Emperor’s New Clothes” picture.  If the media/analyst community will play along with your delusion why ever face reality?  Because, dear marketplace, reality IS.  All the sycophants in the world are not going to create a future for a financial non-starter.

We are stuck in a broken business model with any unlimited-usage strategy.  We’re stuck in it in part because nobody will admit that eventually we’re going to pay for traffic in one way or another.  We’re lacking politically effective remedies because the only way to make a change in the payment model now is to impose settlement on the operators for traffic flows, and regulators have generally said that’s not allowed.  Thus, with bill-and-keep the only option on the payment side, we’re increasing our billings so we can keep more.  Do we want an industry here or not?  We’re out of good choices now, and we’re shortly going to be out of all choices but very bad ones.

Google’s privacy plan is another example.  Because we want the illusion that we’re getting something for nothing, we accept greater and greater risk to personal data and privacy.  But all that information we’re ceding to the great beyond is fueling only one growth industry—fraud.  Advertising sponsorship and targeting cannot fill the coffers of the Googles and Yelps and Facebooks of the world for long; it’s a fifth or less of the world’s communications revenues.  At some point in the near future, the OTTs will have to start charging us too.  Wouldn’t it be better to have a sensible model now, so that we avoid the risk of massive business failures later on?  Greed and fraud created Enron and Worldcom.  We say we punished the perps in those cases.  Stupidity will create the next round of failures, and we’re all guilty.  We’ll be the perps next time, at the court of market reality.

 

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