AT&T Wireless CEO Hints at ‘Managing’ iPhone Data Usage

De la Vega spent his first 11 slides talking about the virtues of the U.S. wireless industry versus the rest of the world, and of the quality and popularity of AT&T’s 3G wireless network and services in particular. He said such a vibrant market needed no additional regulation from the FCC.

De la Vega talked about the enormous growth in demand for wireless broadband service in the US, and about the immediate need to free up more wireless spectrum to accommodate that growth.

But spectrum is hard to come by these days, and, as De la Vega pointed out, even if new chunks of spectrum could be reallocated quickly, it still takes a few years to build the networks that use that spectrum.

Meanwhile demand for mobile broadband rockets upward among wireless users. De la Vega cited research showing that demand for wireless broadband has grown 5,000 times in the last three years. That growth as roundly expected to accelerate in the coming years.

But all that data usage is not evenly spread across AT&T's wireless customer base, De la Vega says--far from it. He cited AT&T research showing that just 3 percent of AT&T's Smartphone customers [read iPhone users] use 40 percent of all Smartphone data, that they consume 13 times the data of "the average Smartphone customer," yet represent less than 1 percent of AT&T’s total postpaid customer base.

Big problem—but AT&T management should have seen this coming a year ago. Or maybe they did, but getting Wall Street to buy into the idea of aggressive and costly network upgrades is like pulling teeth without anesthetic—lots of screaming.

So in the absence of new spectrum and new, faster 4G networks, what does AT&T intend to do about the growing demand in the near term?

De la Vega’s comments on this subject really caught my attention.

Without the proper management of these networks, De la Vega said, regular data users will be “crowded out” by the small number of users [read iPhone users] who use massive amounts of data.

“We have to manage the network to make sure that the few cannot crowd out the many,” De la Vega continued. He said the words “crowded out” at least five times in that part of his keynote address.

But what exactly does De la Vega mean by “proper management”? That kind of talk reminds me of Comcast’s much-maligned strategy of throttling down the bandwidth allowance of users who routinely download large torrent files.

In the face of exploding data service demand and scarce wireless spectrum, does AT&T intend to quietly begin rationing the data usage of bandwidth hogs like the iPhone? Will AT&T begin to quietly “manage” the duration and speed of my 3G connection based on how much data I’ve used in a given day, or on the type of content or services I’m using the bandwidth to access?

Of course nobody outside AT&T knows exactly what the company has in mind. But if De la Vega's numbers are correct, AT&T will be forced to do something, and I got the impression that De la Vega was casually introducing the "rationing" concept to the wireless community today.

AT&T's exclusive deal with Apple to sell the iPhone has made it a top-shelf wireless provider, but that blessing could become a curse if the AT&T 3G network can't keep up with the large bandwidth appetite of the popular device.