4G World: If laptop broadband biz model doesn’t work, why not fix it?

AT&T (NYSE:T) Vice President of Emerging Devices David Haight made a surprising admission during his keynote at 4G World: The embedded mobile broadband business model simply doesn’t work. There aren’t that many laptops with embedded 3G. Those that are out there are hard to find. And once customers get a hold of them, they don’t like the contracts or the rate plans operators offer.

It seems that laptop connectivity would be the ultimate 3G application. Millions of people have laptops. They take them to places where wired or Wi-Fi connectivity often is unavailable. Or if it is available requires authentication registration and payment often on a case by case basis. But consumers and enterprises aren’t sucking up mobile broadband plans the way they’re connecting smartphones and tablets. The reason, Haight said, is carriers and vendors have gotten the business model wrong.

With the launch of the iPad, AT&T saw a huge surge in 3G connections for the iconic new tablet, and while part of that can be explained by the appeal of the device, Haight credits a good deal of its success to how AT&T brought that connectivity to market: no contract, a set price for buckets of data and the ability for customers to control their own usage. Contrast that with the mobile broadband plans, which tend to charge $60 a month with a 5 GB cap with punitive rates for exceeding the cap—and usually a 2-year contract to boot.

Haight acknowledged that mobile broadband plans were conceived in the days before the mobile data explosion. Since then AT&T has learned a lot about what works and what doesn’t in the mobile data market. Wholesale models such as those with e-Book readers, which charge by the transaction, and prepaid models, where customers buy buckets of data at their discretion, clearly work, Haight said. “You’ve got to design business models starting with the end-user,” Haight said. “You can’t take technology and force it in people’s hands.”

So if current mobile broadband business cases have failed, why don’t operators change them. Not just AT&T but every major operator sells broadband access to netbooks and laptops basically the same way: a cap, a contract, a monthly fee and high overage charges. Yet all of them seem to have woken up to the possibilities of metered or tiered charging plans through their tablet offerings. Verizon Wireless (NYSE:VZ, NYSE:VOD) is even selling two different versions of its 3G router server: One customer buys a Novatel Mi-Fi with an iPad and pays $10 to $20 for a gigabyte for data; another customer buys the same device without and pays standard restrictive mobile broadband rates.

After three years of seeing the mobile broadband market inch along while smartphone data plans exploded, you’d think operators would have figured out something wasn’t working. In their defense, they’re probably in the process of overhauling their laptop and data card rate plans as we speak—their experimentation with tablet data pricing was just the first step. Haight’s admission at 4G World today is a good indication they’re speeding that process up.