Operation Chokehold: right questions, wrong answers

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You guys been following Operation Chokehold? Let me fill you in quickly. Fake Steve Jobs (Dan lyons) wrote this amazing post last week, in which he ripped AT&T apart? The provocation? iPhone users on the AT&T network were so totally hooked on to the device that they were consuming lot of bandwidth (3% of smartphones were using 40 percent of the bandwidth of its network capacity). This prompted one of the senior guys at AT&T to say that they might create incentives that would encourage people to stop using AT&T’s data network so much. At the same conference, AT&T also acknowledged that their coverage sucks in some parts of the US. FSS’ point was that instead of being happy that iPhone users are hooked on to the device and raking in moolah for AT&T, here was a corporation that even thought of encouraging consumers to use the product less. Anyway, rest of the posts on this topic are worth at a read at FSS.

FSS then planned Operation Chokehold:

On Friday, December 18, at noon Pacific time, we will attempt to overwhelm the AT&T data network and bring it to its knees. The goal is to have every iPhone user (or as many as we can) turn on a data intensive app and run that app for one solid hour. Send the message to AT&T that we are sick of their substandard network and sick of their abusive comments. THe idea is we’ll create a digital flash mob. We’re calling it in Operation Chokehold. Join us and speak truth to power!

Obviously AT&T wasn’t amused. The FCC got into the picture and now FSS had to climb down from the earlier stand.

It is unlikely that AT&T will change their way of business drastically solely on FSS’ provocation. FSS did everything right except make the wrong choice with Operation Chokehold. Willfully bringing down a network that would affect millions of other customers? That was plain stupid and dangerous. But I thought the intent behind the original post was valid.

We’ve (Apple) brought all these new customers into AT&T, and AT&T has raked in billions of dollars in revenue from these new customers, but instead of plowing that money into building out their network, they’ve held the money back and applied it to earnings — lining their own pockets and looking after their investors instead of looking after customers.

Sadly, this central point is getting drowned out in all the excitement about the threatened protest. I am not familiar with AT&T’s coverage and service, but given the huge increase in traffic and revenues thanks to the iPhone (and competition) it’s only fair to expect a company to ensure that they handle the increased demand well. In India when a movie is big hit, additional prints are arranged for – people aren’t stopped from going to the cinemas. Or when there is unprecedented demand for a music album, they simply produce more and meet the demand. As an aside, doesn’t this scenario of companies raking in the monies and not investing it back in improved customer experience, sound familiar to us too? Think our automobiles of yesteryears, our banks…

Here’s the irony – Fake Steve Job’s website can’t seem to take the increased traffic and frequently shows up Error 500.

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  1. While it may be easy to meet the overfull demand for movie prints or music albums, I am guessing that amping up network infrastructure is not as easy to do overnight; data & voice networks require a lot of investment, physical infrastructure, permissions, etc. Also, broadband on mobile has taken off only in the past few years with the advent of 3G, smarter phones, cheaper data plans and gripping apps. For AT&T, it may be as simple as not being able to forsee the load, especially since these networks are designed using probabilistic models and not a simple ‘capacity = X users * Y MB/user’ funda.

    AT&T was of course wrong in its planning and reaction, but these are early signs for all such service providers to keep pace with the data revolution.

    At the same time, I have been wondering for a long time if there can be a differentiation in service levels/services that can be created in a telecom/data service, one can charge higher for stringent SLAs, not just faster download speeds and higher free downloads.

  2. Viral, thanks for the comment. But when one looks at this post which compares the increase in operating income to the reduction in cap expenses (over a full year), one wonders where the money is going.

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