How To Tell Your Customer To Stop Using Your Product

by drjim on March 1, 2010

Now AT&T Product Managers Need To Slow Down Their Customers

Now AT&T Product Managers Need To Slow Down Their Customers

AT&T’s iPhone Problem

Who among us product managers has not heard about Apple’s iPhone product and its incredible retail success? Currently in the U.S. there is only one wireless service provider on who’s network these highly desirable phones work: AT&T’s. You’d think that that was a good thing from an AT&T product manager’s point of view, right? Well it turns out that the old saying “too much of a good thing is bad” truly applies in this case…

It turns out that the iPhone, while it’s a great phone to use, is a terrible phone to have running on your network. A recent story in the New York Times reported that AT&T’s reputation is taking a severe beating because of the connectivity problems that iPhone users have been having. What makes this ironic, is that it turns out that the problem isn’t really AT&T’s but rather how the iPhone was designed!

No matter, AT&T needs to do something and do it quickly. One of the issues that they know that they have to deal with is the problem of customers who love their iPhones just a little bit too much – the heavy data users. To deal with this problem, AT&T is planning on taking steps to curtail excessive data usage by these iPhone customers.

From a product manager point-of-view, these users are responsible for much of the growth in wireless data traffic on the AT&T network as well as perceptions of problems with the network. In order to deal with the issue of customers using too much of the available bandwidth to send and receive data from their iPhones, AT&T is thinking about introducing what they are calling “incentives” that they hope will encourage customers to cut back on their iPhone data usage.

Just to show how much of a problem the iPhones are causing, a recent study revealed that the average iPhone user consumes five to seven times more data on a monthly basis than an average AT&T subscriber who mainly uses their handset for phone calls. Clearly the AT&T product managers have their work cut out for them!

Possible Solutions

What’s a product manager to do? The trick here is that AT&T loves to have subscribers. In fact, the more subscribers that they can get to join every month, the better they are doing as a business. The problem is that some of these subscribers are degrading the quality of service for the remaining users and people might start unsubscribing because of this.

If we take a look in an AT&T product manager’s bag of tricks, the solution that we’ll almost immediately stumble across is of course usage based pricing. The way that AT&T has their product pricing structured right now, it’s almost encouraging iPhone users to send and receive as much data as possible. iPhone users are only required to pay $30 a month for the right to send and receive an unlimited amount of data.

As the AT&T product managers consider their options, they need to be careful that whatever they decide to do they don’t end up punishing the majority of their users for the actions of a few data intensive users. They could start to ration data like they do for talk minutes and once a user exceeds their monthly allotment amount of data that can be sent or received, then they would start to pay an additional fee.

A more controversial solution is for the AT&T product managers to take things into their own hands and when they detect a heavy data user, they could start to slow down (“throttle”) an iPhone user’s connection if their usage is hurting the network access for nearby users.

What All Of This Means For You

As product managers we are always taught that the more that our customers use our products, the better life will be for us. Clearly, the AT&T product managers have run into an exception to this rule. Their next steps have to be taken carefully.

Two levers that they can pull include changing the subscription pricing to encourage the behavior that they want or changing the way that the product works to restrict heavy data user’s access. Both have advantages and disadvantages.

No matter which option they select, the AT&T product managers need to do something. Nobody ever said that being a product manager was going to be easy and this is a classic example of why product managers are so valuable…

What do you think that the AT&T Product Managers should do in order to minimize abusive iPhone data users?

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{ 5 comments… read them below or add one }

Mike March 3, 2010 at 8:31 pm

Seems like the wrong way to look at this. The AT&T PMs should be saying “how can we upgrade our network to support more of these heavy users?”

These people are iPhone enthusiasts. They’re paying $100/month when other phone users are paying half that.

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Dr. Jim Anderson March 5, 2010 at 4:14 pm

Mike: you make a good point — I haven’t hear anyone else take that approach. I think that AT&T has tried to upgrade their network, it’s just that they can’t keep pace with iPhone sales. We should all have such problems!

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Travis Jensen March 9, 2010 at 11:36 pm

Do you have a reference on the problems being how the iPhone was designed? Being an iPhone user who has experienced AT&T’s decreasing quality over the last couple of years, I have not seen anything that has identified the iPhone as the problem (as opposed to the order of magnitude more data iPhone users are using). I’d be very interested in reading said reference.

I agree with Mike above that AT&T should have embraced these customers. AT&T’s problem is that they decided they would keep investing the same amount of money in infrastructure as the pre-iPhone days and just pocket the increased revenue.

If you are going to be an infrastructure provider, you have to invest in that infrastructure. If you get popular, it seems like you would have to invest more. AT&T didn’t, and their reputation is being beat up as a result.

IMO, the product management lesson is don’t piss off the vanguard customers.

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Cameron Woods April 11, 2010 at 10:42 pm

I’m not really sure on how At&T’s agreement with Apple works. However, it seems like At&T should try to get a limited amount of iPhones out on alternate providers (maintaining certain exclusive features on their iPhones) to reduce data consumption, adjust their pricing plans to reflect consumer demands after a multi-provider shift, and improve their infrastructure while iPhone sales temporarily drop. usage-based pricing and throttling are absolutely the worst things they can do not only because of the rapid improvement of other phones, but how fast the average device gets “cracked” today. (jailbroken iPhones)

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Dr. Jim Anderson April 15, 2010 at 8:14 pm

Cameron: all good suggestions. However, the problem is that no matter how beat up AT&T gets in the press, they are still selling the iPhones and signing up new 2-year subscribers like hotcakes. When times are good, it’s awfully hard to make changes…

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