Apple’s iPad will be driven by Wi-Fi, and not 3G wireless connectivity, said AT&T CEO Randall Stephenson at a Morgan Stanley conference in San Francisco yesterday.
“Our expectation is that there’s not going to be a lot of people out there looking to get one more subscription,” he said. “We expect it to be a Wi-Fi-driven product – that’s why its [3G connectivity] is more of a prepaid model. … It’s a ‘buy by the drink’ approach.”
Critics of AT&T’s network have expressed skepticism over the carrier’s ability to support an onslaught of iPad traffic on its already heavily burdened network. Stephenson appeared unconcerned about the effect of the iPad on AT&T’s network, although he said he was “anxious” to see how iPad customers chose to connect to the Internet.
Stephenson also addressed usage-based pricing models. He said the industry would “progressively move toward variable pricing: The heavy consumers will pay more than the low consumers.”
Stephenson’s comments were in line with the sentiments expressed by AT&T’s top wireless executive, Ralph de la Vega, who recently expressed support for tiered pricing models. Many of AT&T’s customers are on flat-rate, unlimited, all-you-can-eat voice and data plans despite the fact that usage varies wildly from subscriber to subscriber. AT&T reports that just 3 percent of iPhone users generate 40 percent of its data traffic.
Stephenson also addressed plans for its pending 4G deployment. AT&T’s LTE network will be deployed after Verizon’s, which is scheduled for commercial deployment at the end of this year. Stephenson defended AT&T’s strategy, saying, “We’re not in a tremendous hurry for LTE.” He said that AT&T’s HSPA 7.2 deployment and beefed-up backhaul will double its mobile broadband speeds this year.