

AT&T's new data plans will ruin the future of mobile - zacharye
http://www.knowyourcell.com/features/500300/atts_new_data_plans_will_ruin_the_future_of_mobile.html

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mdasen
The article points out a definite possibility. However, I prefer to be
optimistic. Usage fees could give carriers a large motivation to make their
networks faster and add capacity. As carriers increase capacity and speed,
they will likely compete with each other to drive down prices per unit of
usage. Right now, most carriers are offering 5GB for $30 and AT&T just made it
2GB for $25. That said, I can't see that pricing sticking around for long. As
the four carriers push into 4G in the coming year, there will be intense
competition to offer users data services. As capacity increases, carriers will
take into consideration that increase as well as the cost of building that
increase and figure out what they can offer more cheaply.

Usage fees aren't bad when they're modest. Most of us pay for heat and
electricity that way. For those of us who have a server, we get an allocation
of bandwidth and overages are usually very reasonable - or with Amazon, you
pay for what you use. Now, telecoms haven't always had the nicest pricing
structures in the past, but I remember when long-distance service became very
competitive and the price of minutes sunk. I'm hoping that the combination of
4G and two new entrants to the wireless world (Cricket and MetroPCS) will make
data look more like long distance service.

Usage fees aren't terrible. Carriers do have costs to increase capacity and by
charging those who are using that capacity, they have an incentive to build a
good network and don't end up making light users subsidize heavy users. We
must be vigilant that usage fees aren't onerous or out of line with costs, but
I'm hoping that the combination of competition and increased capacity will
keep prices down.

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ajg1977
"They will likely compete with each other to drive down prices per unit of
usage"

I would say this is very unlikely. Look at call minutes, look at SMS messages.

Both of these have plenty of scope for carriers to cut costs and compete while
still being a profitable item. Do the carriers do this? No, not at all. They
all keep their prices artificially high and roughly equivalent because it is
in their joint interests not to compete too much.

If you look outside the US, there are plenty of telco's who's data prices are
way higher and kept their for exactly this reason.

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bonzoesc
Both voice minutes and SMS tranches are for a mostly static demand though. I
suspect that most users use about the same amount of voice minutes and SMS
messages as they did last year (at least if they are in a similar
cell/landline situation from year to year).

However, data demand isn't static, and it's going up. So I wouldn't expect to
see data prices stay as stagnant as voice minute and SMS prices have,
especially since that's the lucrative growth area cell networks have now.

~~~
ajg1977
According to CTIA, text message usage in the US grew 50% between 2008 and
2009, and so far in 2010 the increase is even greater. Can you guess what's
happened to prices?

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jasonkester
America had just about caught up to the rest of the world for a second there,
but this puts us back where we're comfortable, five years behind everybody
else.

A couple months ago, I was in Colombia, where for $20/month you can get
unlimited wireless broadband, pre-paid, without a contract. Colombia, fer
cryin' out loud, where they still have insurgents attacking the army and
pirates operating near major cities, but somehow they manage to figure out how
to do mobile broadband better than the USA.

Needless to say, Europe and Asia left us in the dust years ago. It's
incredible that I still can't walk into a store in LA and buy a USB stick with
a month's worth of unlimited bandwidth on it.

~~~
sjs
I was talking to my sister and her husband the other day. They recently moved
to Singapore and have 12gb/month data plans. I don't know what they pay but as
they're both casual users I assume they didn't get anything outrageous. Made
me very jealous as I pay CAD$20/month for 1gb with Rogers here in Canada. I
guarantee they're not paying $240/month for that plan.

I checked the SingTel site[1] and I'm guessing that they each have the $39 or
$56 plans, $30 and $45 in Canadian dollars. That's their entire plan including
voice, data, and everything else. I wish I didn't know how good it is in other
countries. Fucking useless CRTC doesn't do anything about Canadian telecoms
colluding and price fixing. The telecoms here have no interest in competing
with each other.

[1]
[http://info.singtel.com/personal/communication/mobile/mobile...](http://info.singtel.com/personal/communication/mobile/mobile-
phones/iphone)

~~~
aquark
As a fellow Canadian I agree with the sentiment and would love to see lower
prices.

But to be fair(er) to the telco's, it is a little easier to provide decent
cellular coverage across Singapore than it is across even the densely
populated swaths of Canada.

As a rural Canadian I'm not sure I could push much more than 2GB through my
home internet connection a month if used it 24/7.

~~~
sjs
That's a common line from the telcos but in reality very little of Canada is
actually populated and a huge percentage of our people live within 100-200k of
the US border. The most difficult area to cover is BC because of all the trees
& mountains. If you look at coverage maps they seem to have little trouble
covering even the most rural parts of Alberta. Say Rogers has 1,000,000 3G
customers (very modest). How many years does it take to pay off the cost of
building the network? 2? 5? 10? At $50-80/month per customer they pull in at
least $600,000,000/year. I don't care what their operational costs are they
can cover it. That's assuming they have only 1,000,00 customers paying
$50/month, while in reality they probably have closer to 5 or 10 million
customers paying them upwards of $80/month.

I just agreed to pay Rogers $30 for 10MB of roaming data in the US while I'm
at WWDC. I'm obviously going to go over that and will be charged $3/MB all the
way up beyond the 10MB.

That is just greed. They take advantage of people who either have the company
paying the bills or don't really know how much data they'll use. There's no
way I'll use my phone normally while I'm away, but I should be able to. This
has nothing to do with Canadian infrastructure and everything to do with being
taken advantage of because we are locked into contracts, and even if we
weren't Canadian telcos do not compete with each other. They all have
outrageous pricing last I checked. Maybe things have changed with providers
besides Rogers during the last couple years but I doubt it. They have no
reason to compete with each other if they can fix prices and all make a
killing. Prices are too similar across the board for me to think otherwise.

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pkulak
Sounds like the price of this resource is just finally getting in line with
its actual cost. Bandwidth has never been free, and just hoping and praying
that your customers don't use too much is stupid. When there was one real
smart phone, and it could only use edge, with no custom apps and not many
other services set up to use it, you could get away with "unlimited". Not now.

I mean, this is capitalism, right? How is one company going to charge too much
more than the cost of the bandwidth without another company undercutting them?
I don't pay monthly for unlimited breakfast cereal, or gasoline, and yet
somehow capitalism has managed to keep those prices in check. I have no idea
why this guy thinks that bandwidth is so different from every other good or
service.

~~~
w1ntermute
You can't compare breakfast cereal or gasoline to a cellular connection.

The cellular industry, due to its high barriers to entry (stemming from the
enormous initial infrastructure costs), tends towards a natural monopoly. In
this case, it hasn't quite reached a monopoly - instead, we have 4 main
companies (AT&T, Verizon, Sprint, and T-Mobile), also known as an oligopoly. I
know there are smaller carriers, but since they don't provide coverage
everywhere, their product is not the same as the one provided by the 4 major
carriers.

The problem is that when there is a disparity between the value of a product
to the buyer and the cost of production to a seller, if there is natural
competition (cereal, gasoline, etc. are relatively close to natural
competition), the actual price will tend towards the cost for the sellers,
since companies will keep undercutting each other until the price drops to the
lowest they can accept without losing money on each sale. OTOH, if there is a
natural monopoly (or something close to it), the actual price will tend
towards the value for the buyers, since the lack of competition allows the
price to rise as high as the buyer will tolerate.

In the case of bandwidth, the marginal cost for the telecom companies for each
byte transferred is miniscule compared to the value it provides to us. If we
had an industry with natural competition (like they do in other countries
where the government owns the pipes and the telecom companies simply lease it
out), then we would only be paying that miniscule cost (which essentially
rounds off to a flat monthly fee for unlimited access). But since we have an
industry that tends towards a natural monopoly, the companies will milk us for
every penny we're willing to give them.

~~~
pkulak
An oligopoly is fine as long as there's no collusion. If there is in the cell
business, then yes, we have a huge problem. But if there isn't, then whatever
ends up happening will be fair to all parties. I don't really think the
marginal costs for cell bandwidth will approach zero for a long time now, but,
if it does, then we'll see unlimited plans pop up again just like they have
for wired connections.

~~~
w1ntermute
You completely missed the point of my post. The issue is that when you have a
monopoly or near-monopoly (oligopoly), the prices are primarily determined not
by the cost for the sellers, but by the value for the buyers.

Therefore, unless the amount of value that each byte of cellular data transfer
provides decreases significantly for a significant portion of the telecom
companies' customers, the prices won't decrease, regardless of what changes
occur in the costs to the companies.

That is, of course, unless the government steps in as it has in other
countries and artificially fosters competition, so that the cost to the
companies plays a more significant role in determining the prices.

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slapshot
Or, AT&T's new data plans will empower the future of mobile by making mobile
app developers use bandwidth intelligently rather than wastefully. If
bandwidth is free, there's no reason to focus on preserving it. The result is
a tragedy of the commons where apps use more bandwidth than they have to,
slowing the network for everyone and making some apps impossible to run in
crowded (SXSW) or remote environments.

Maybe a challenge to use bandwidth wisely will spur innovation.

~~~
dbrannan
Oh yes, now everything mobile will look like Craigslist. Gee, what a step
forward for everyone!

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Raphael
CSS doesn't take much space. That gives you colors, fonts, and layout.

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furyg3
_How else will a service like Hulu be able to reach mobile devices? It would
eat through caps like a hippy at a Phish concert._

Wow. With all the pun threads on the internet nowadays... that's really one of
the best ones I've seen in a long time..

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rbarooah
In the uk where there are 5 competing GSM networks, you can get 10GB for £15
($22) as a microsim for the iPad with no contract. You can do even better if
you're willing to sign up for a long period.

AT&T's deal is more than 5 times the price of that. Is there a good
explanation for this other than lack of competition?

~~~
jsz0
Geography & population density play some role. The landmass of the US is 70x
larger than the UK, which is about the size of Alabama, but the US has only 5x
more population. I don't think that totally explains the 5x price difference
but it's worth considering.

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malbiniak
In short, the net neutrality debate just went mobile.

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gojomo
_Except_ when moving, ubiquitous wifi would be better than 3G anyway. So
instead of whining, let's blanket the nation with open wifi access points.
This doesn't require any new lobbying or help from the mobile oligopoly.

