Aug 26, 2011 9:38 AM,

The shifting sands of carrier ARPU, a la AT&T

By Rich Karpinski

Carriers need to move beyond small print fees and bill shock as a business model as they maneuver around the landmines of moving to an entirely new way of doing business

This morning: a very interesting post at DSL Reports about AT&T adding a “min-use” fee for its landline long-distance customers. That pro-consumer site of course derides the move, and it’s perhaps hard to argue otherwise. Charging customers for NOT using a service is sure to raise a few eyebrows. But what’s more interesting is watching how carriers are dealing with the erosion of their traditional ARPU (average revenue per user) drivers – in ways better and worse.

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Take AT&T’s case. When you start to look at their recent moves in whole, you see the “shifting sands” of carrier ARPU in full effect:

- The long-distance non-use fee, described by the Cleveland Plain Dealer as first showing up on customers’ April/May bills, charges users without a long-distance plan a $2 fee if they don’t spend at least that much per month on per-minute long-distance calls.

- This spring, AT&T began implementing 150 GB monthly usage caps on its wireline broadband service, with customers facing $10 charges for every 50GB over the limit (CP: AT&T set to roll with DSL, U-verse broadband usage caps).

- On the wireless side, AT&T recently did away with its budget SMS plan, which started at $10, moving all texting customers to its $20 per month unlimited plan (AT&T to 'streamline' texting plans by essentially doubling fee). Of course while AT&T is moving SMS customers to unlimited plans, it is moving data users away from unlimited, and even grandfathered unlimited users toward throttling (CP: AT&T subs holding on to their unlimited plans -- but change is coming).

Now certainly AT&T isn’t the only carrier, in particular on the wireless side, to change and experiment with pricing, caps, tiers and more to deal with drastically changing customer usage patterns – from high-bandwidth Web and mobile streaming to landline and video cord cutting and beyond.

That said, fine print fees and bill shock bonanzas do not a business model – or loyal customer base – make.

It’s only fair to give carriers time to figure out how to price new services, like LTE (CP: Early LTE pricing plans skew to basics: tiers, throttling and little imagination) to counteract the loss of legacy service revenue.

But the clock is ticking…