Updated on June 7th, 2010
Patrick Star: “Opposite Day? Hey, I’ve heard of that.”
SpongeBob: “You have?”
Patrick Star: “No, what is it?”
SpongeBob SquarePants (1999)
Last week AT&T announced “new wireless data plans that make it more affordable for more people to enjoy the benefits of the mobile Internet.” How will AT&T do that? It is abandoning unlimited data services effecting June 7, 2010, and moving to usage-based pricing plans. The lowest-price plan is 50% less expensive than AT&T’s current unlimited data plan and offers enough data to satisfy approximately 65% of AT&T’s customers on average according to AT&T’s press release. The current unlimited plan is $30 per month. The new smallest plan available is only $15 per month for 200 MB of data (but, if customers exceed 200 MB in a monthly billing cycle, they will receive an additional 200 MB of data usage for $15 for use in the cycle). AT&T will also offer a plan that allows up to 2 GB a month of data usage for $25 (with an additional $10 charge for an additional 1 GB over the limit).
With these new plans it looks like the average AT&T customer will actually save money, which should make “consumer groups” happy, right? Not when it’s opposite day. Rather than recognize the benefits of a more rational pricing scheme – one that accounts for actual usage patterns – Chris Riley at Free Press accused AT&T of “price gouging” for charging “low-end users $15 per 200 MB” rather than the $30 per month they pay now for unlimited service they don’t need. Yes, SpongeBob, it is price gouging when you lower prices – on opposite day.
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AT&T Wireless pricing
Updated on January 5th, 2010
“You don’t know how hard I found it, signing the order to terminate your life.” Governor Tarkin, Star Wars (1977).
With all of the emphasis on technology innovation in the net neutrality NPRM, it hardly mentions innovation in business models. Perhaps business model innovation is simply underappreciated in an era in which shiny new technologies are introduced so frequently. Knowledge@Wharton has said that “[o]ne of the most common misconceptions is that innovation is primarily, if not exclusively, about changing technology.” As the FCC recognized in its Wireless Innovation NOI, however, companies innovate with their business models as well as with their products and services, and use business model innovation (“BMI”) to achieve and sustain competitive advantage. Indeed, a majority of executives now believe that BMI is even more important to creating new and differentiated value than product or service innovation. According to Samuel Palmisano, “with product [or service] innovation, it’s a certainty that your competition is shortly going to copy what you have done. . . . With business-model innovation, though, if you can come up with a unique way of doing things, it’s much tougher to react to.” Technology alone is not the fundamental engine of innovation.
Technology and business model innovation typically occur together. This can be seen in the mobile wireless broadband market, where the technological transition to next generation mobile wireless broadband is driving tremendous business model innovation and experimentation. As a result, mobile wireless broadband platform providers are experimenting with many different business models as they try to determine how to best leverage new mobile wireless broadband technologies and differentiate their services from competitors. The (non-exhaustive) mobile wireless broadband business models outlined below demonstrate the diversity in innovative business approaches to this market. Read the rest of this entry »
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AT&T Wireless Clearwire FCC Innovation NPRM Sprint-Nextel Verizon Wireless Mobile Broadband