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> If you're paying more than $30/mo at home for land based Internet, you feel like you're being ripped off.

Please speak for yourself: I pay much more than this, by choice (to get higher bandwidth caps). (For the record, I also "put my money where my mouth is", and immediately called AT&T when they started phasing out of unlimited data plans and opted myself out of that plan to the limited one. This has meant that on some months I pay much more than I used to, but it has also meant that on many months I pay less; it also means that I no longer am contributing to a systemic bias against disruptive-ish services like FaceTime or Netflix.)

> Compare it to Cable Internet. You are capable of receiving impressive speeds during low use time and your experience will suffer during high use time. Same with cell phone data.

This only argues for peak vs. off-peak pricing being different. In fact, I specifically cover this in my talk with an analogy to how electricity is billed. It simply makes obvious sense that if, in the middle of the night, bandwidth is nearly free due to unused infrastructure, yet during the day it is a spare commodity, that bandwidth should be priced differently during the night than it is during the day. Hell, even our cellular telephone service is billed in this way: it just makes sense.

> And you take into account that an average home user will use much, MUCH more data than what cell phone companies are charging their $30 on.

You seem to believe (not just with this sentence, but with most of your argument) that data should cost the same whether it comes over a wire or via a cellular connection: the costs simply aren't the same for numerous reasons ranging across the board from the technical to the political. (This includes some less-obvious ones, such as how no one wants a cell tower in their neighborhood, yet everyone wants good cell service: I discuss this particular issue in my talk along with some humorous slides.)

> We're not talking about what the probability of what a customer would or COULD use, we're talking about actual amounts.

No, actually: we have to talk about the probability of what a customer would use, as to do anything else is to price yourself out of the market. Again, I go into detail on this in my talk, using an analogy involving salt, but in this case, if AT&T charged for the actual bandwidth on the label it would be trivial for competitors like Verizon to undercut them by just noticing "hey, our average usage is for half of what we are charging, so there's a ton of overhead in our margin we can give back to the customer". Carriers, like most other almost entirely fungible commodity (they really are a "dumb pipe" with only minor differences in quality or locality), are in fierce pricing competition.

> Why? Maybe you could compare it to satellite based Internet. Satellite has fixed bandwidths and astronomically expensive equipment and that's all it does it provide Internet service. But, why would you compare it to satellite based? All a cell carrier does is get it back to a tower a maximum of 5 miles away. There they pay for land based Internet pipes.

Again, you seem to be entirely discounting the cost of those towers, both in terms of infrastructure and equipment and in terms of land; you also seem to be discounting the concern of limited frequency space, and the fierce competitions that occur to obtain it from the auction system we have for selling it off. If you want really cheap bandwidth, get a land-line: as you say, they exist.

And yes: even satellite internet may be cheaper in many circumstances; if nothing else, you have to take into consideration that most of the carrier plans people look at and compare are smart-phone subsidy contracts, which means that you are paying much much more than if you were willing to accept that, in fact, that iPhone or Android device in your pocket should have cost $500-$600. For some stupid reason, people get sticker shock at a large investment in hardware, but are willing to just whine about service costs.

> So, I simply ask, if you support a pay as you go model for cell phone providers, what price per MB do you have in mind? Because right now, it highway-frickin'-robery and they're still whining about data usage.

This question doesn't really matter; in essence, you are asking it because you feel that the carriers are drastically overcharging for a service that you somehow believe you can get from your cable provider, and thereby are certain that in a per-kB world the price will somehow be even more ludicrously expensive.

My contention is that the core issue here isn't price: it is poor incentives; the carriers are incentivized right now to hate data, as they are billing for it in an incorrect unit, leading to all kinds of weird pressures in seemingly-unrelated parts of the ecosystem, such as the old rule the iTunes App Store used to have on applications that used "too much" bandwidth (this was thankfully dismantled when AT&T stopped offering "unlimited" bandwidth pricing): you simply wouldn't have those horrible incentives under per-kB pricing.

Meanwhile, I am fairly certain that, based on the rather poor profit margins I see when I look at the financial statements released by carriers, combined with how fierce they seem to be to jump onto pricing models that aren't even sustainable in the long term yet give them temporary advantages over their competitors, that whatever the price that ends up coming out of this will be mostly fair. More expensive than cable? Well, duh. But, more expensive than now? Only if the customers suck and change their behaviors because of it; otherwise, when you have better pricing models things actually tend to get cheaper for normal people (as they did for 95% of customers when AT&T stopped running their unlimited data pricing plan).




BTW, I didn't say it before and feel like a heel. Thank you for all the work you do for iPhone users. I have nothing but immense respect for you, your time and your talent. Also, I did watch some of the video (like 10 minutes) but the audio was so echo-y that I couldn't really understand you.

This was never about arguing with your points and I know I didn't make mine with the most scientific of data. I worked for an ISP for 7 years and know first hand on the costs of licensing spectrum and what the 700 MHz sold for at auction. They are a wireless ISP and I was the purchasing manager,so I also know what it costs to put up a tower (actual costs as well as land use, leases, licenses, etc). I believe that if a small, regional ISP can do it and still offer affordable service to the customer, then it should be easier for a much larger company such as AT&T, Verizon, etc to do it.

I know I clumsily compared it to cable and satellite Internet service and made vague arguments about customer perception and price. I do feel that they are somewhat valid because I think customers focus on price first and QOS, data amounts and reliability second, third, never...

I think we're in agreement that if there was a model that was based on usage and actual costs (and not some arbitrary amount that they think they can squeeze a customer for) then we'd all be better off and have concrete numbers in hand. That would allow us to use our data however we feel like. Kinda the same as Nathan is arguing about his "unlocked" phone what what he should be able to do with it.

Lastly, have a Happy Thanksgiving and enjoy the time with your family. - burtrom

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