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AT&T plans to charge smart phone customers for heavy data traffic [Corrected]

December 9, 2009 |  5:30 pm
Iphonecar
Smart phones are powering increasingly high-octane applications.  Here, a student in Berlin steers a converted, full-size Dodge minivan using an iPhone. Credit: Sean Gallup / Getty Images.
The current crop of high-tech smart phones can take the place of all manner of other devices: music players, cameras, televisions, the remote control, arcade machines, even video surveillance consoles.

But for major smart phone carriers like AT&T, there's another appliance that the iPhone and its ilk resemble all too closely: a vacuum.

In a presentation to investors today, AT&T's head of consumer services, Ralph de la Vega, acknowledged that just 3% of iPhone users accounted for a massive 40% of the data traffic on AT&T's mobile network. By using data-intense applications such as streaming audio and video services, a small number of iPhone users have been putting a huge burden on the company's network, causing lackluster performance in major markets including New York City and San Francisco.

But those data hogs may soon see their phone bills fattening, too.

AT&T will probably introduce a pricing system that penalizes heavy data users, he said, to encourage them "to either reduce or modify their usage so they don't crowd out the other customers in those same cell sites."

"We've got to get to those customers and have them recognize that they need to change their pattern, or there will be other things that they are going to have to do to reduce their usage," De la Vega told a group of investors at UBS.

De la Vega did not offer specifics on the data pricing. In general, smart phone users pay a fixed monthly rate for unlimited data, but AT&T and other companies have found that the explosion of phone applications that must connect to the Internet has caused a major surge in the amount of transmission capacity users are consuming.

Companies can barely build cellular towers fast enough to keep up with the demand. De la Vega said AT&T will have built 2,000 new cell sites this year, and plans to continue investing heavily to keep its networks fast and dependable in the face of the data onslaught.

"What we're seeing in the U.S. today, in terms of smart phone penetration and 3G data, nobody else is seeing in the rest of the planet," he said.

[Corrected, Dec. 10, 5:13 p.m.:   In a previous version of this post, a quote by De la Vega that began with "We've got to get those customers...," should not have ended with the phrase "or have to face other things." The quote was also incomplete, and a full version is provided in the updated post above.

Also, the statement, “But those data hogs may soon see their phone bills fattening, too,”  should not have been attributed to de la Vega.

Finally, the headline of the post may have given the impression that AT&T had announced a plan to charge heavy data users.  No specific plan was announced.]

-- David Sarno

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