Fractals of Change: AT&T “Freeloading” on ISP Pipes

April 12, 2011

AT&T “Freeloading” on ISP Pipes

AT&T, on whose network Mary's iPhone usually runs, just gave us a free microcell so that we can take cellular traffic off their network and put that same traffic on the network of our local ISP, while still paying AT&T for voice minutes and data bytes. This is an enormous irony considering the q and a below with ex-AT&T Chair Ed Whitacre (when he was CEO of SBC which was about to swallow the old AT&T):

Q: "How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?"

A: "How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

"The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"

Now who's freeloading?

It's our ISP which invested in the "broadband pipe" to our home. It's AT&T which wants to use that pipe without compensation (by them) to the ISP because its own network is expensive, under-deployed in rural areas, and overwhelmed by smartphone traffic. The broadband worm seems to have turned.

Actually, this isn't freeloading despite what Whitacre said. We pay for the broadband connection to our home; our monthly rent on our broadband connection pays for a share of our ISP's backhaul costs. We should and do have the right to use it for any activity we want. But the irony is delicious, nevertheless.

And Now for the Product Review

We didn't ask AT&T for the "AT&T 3G MicroCell", which is made by Cisco. We have pretty good AT&T coverage at our house and hadn't complained. But they sent Mary a letter urging her to go down to the AT&T store and pick one up free. She knew I'd want to blog about it so she did.

What this microcell does is act as a minitower in your house for your AT&T phone and up to nine other (AT&T) phones if you choose to authorize them. This is particularly useful if don't have a good signal where you live because you don't even need to have a tower within range to use your AT&T phone so long as the microcell is nearby. The microcell has an Ethernet port through which you connect it to your router. The voice or data from your phone then travels to and from AT&T 's switching center over the Internet. You do have to put the microcell somewhere where you can reach it with a cable from your router since it doesn't support WiFi.

If you leave the house and are still on a call, the call won't drop (according to AT&T) if an actual tower is close enough for you to connect to it. However, if you start a call on a tower, it won't switch to the microcell even if the tower is not reachable from inside your house.

Setup was easy and straightforward even though I ignored the ridiculous instruction that I power down my DSL modem and router as part of the process. We don't do that around here except in emergencies.

As part of online setup, you're asked for your address so that this can be given to emergency services if you make a 911 call using the microcell. In order to avoid you moving the microcell to some other house and not updating the 911 address, the unit has a GPS so it knows where it is. I haven't experimented yet to see what it does when it discovers it's been moved.

The outside of the box says in big print "Unlimited wireless calling at home.**". But it pays to follow the asterisks. The fine print says "Post paid wireless plan from AT&T required. Unlimited talk option available for additional monthly charge." Translation: If you pay an extra $19.99 per month you'll have unlimited voice calling for calls made through the microcell – in other words, unlimited calling when you're at home. Clearly a benefit if you've got a home business and/or you want to get rid of your land line phone AND do the bulk of your calling at home.

You don't get any extra data usage by paying the $19.99, though. Even though the data is traveling through your connection, you still pay AT&T full freight for it. You only get "free" data if you connect your phone via your WiFi connection (different topic).

Even though we got our microcell free without asking for it, the AT&T site just directs you to a store and doesn't give a price. According to Gizmodo, it normally costs $150 with various rebates available. I have no idea why we were offered ours free. I suspect it is either because the AT&T network is overburdened in our area or that AT&T, which doesn't provide landline service in Vermont, wants to use this as a wedge to replace local landline providers. Maybe it's just a market test.

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