AT&T this week said it’s changing the way it prices its broadband service to consumers. Rather than marketing speeds at “up to” a certain point, AT&T will instead offer customers tiered plans, with clearly stated minimum and maximum transmission rates. It will then attempt to meets those speeds, and if it cannot, it will give the subscriber the option to move to a lower tier and pay less. The new speed and pricing tiers will become available in October. AT&T did not provide pricing or speeds.
AT&T’s senior federal regulatory VP Robert Quinn told the FCC at a hearing on digital policy, “When AT&T provides broadband service by speed, it will do so in discrete, non-overlapping tiers.” In his written testimony Quinn said, “We will strive to provide service within the speed tier purchased by the customer and, if we find that we are not providing service within the ordered speed tier, AT&T will take action either to bring the customer’s service within the ordered tier or give the customer an option to move to a different tier.”
Quinn said AT&T cannot guarantee speeds for each of its broadband subscribers because it does not control the non-dedicated, shared part of the Internet.
“One of the challenges associated with providing broadband Internet access is the fact that end-to-end Internet throughput that customers experience is largely outside the control of individual broadband providers like AT&T,” Quinn said.
AT&T will change contracts and disclosures to reflect the changed policy, Quinn said. He added that the notices will “clearly identify any limitations on the amount of usage that may apply to a customer’s service plan.”
Strategy Analytics, in a new report “AT&T’s Tiered Service: Taking a Bite Out of Fraudband” applauds the move. It says the new tiers don’t necessarily represent an actual performance improvement, but the transparency it provides to the customer will serve to enhance the overall quality of experience (QoE). It is a step in the right direction, and one that customers will welcome.
The notices will also explain the difference between the speed capabilities that AT&T provides and the throughput speeds that are dependent on other networks.
“The ‘up to’ marketing strategy has drawn the ire of broadband customers for years,” said Ben Piper, director of the Strategy Analytics Multiplay Market Dynamics service. “It is widely perceived as a classic ‘bait-and-switch’ technique, analogous to a supermarket advertising a six pack with ‘up to six cans.'”
He said there are clearly service issues beyond the Service Provider’s control, including customer equipment and distance from the central office. However, the policy shift ensures that customers get a better understanding of the types of speeds they can reasonably expect. This alone could help AT&T differentiate itself in the market, the company said.