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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 fa
by mdasen 16y ago
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.
- bonzoesc 16y agoRight 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. […] Usage fees aren't bad when they're modest. Most of us pay for heat and electricity that way. 2GB for $25 is pretty modest for current wireless devices; most users (including tech industry journalists[1]) don't hit it at all. Therefore, for an average month of usage, 2GB for $25 is cheaper than 5GB or unlimited for $30, simply because it's not pro-rated if you use less. The only real problem is selling it to the non-nerd set. [1]: http://arstechnica.com/telecom/news/2010/06/iphone-data-usage-we-show-you-ours-please-show-us-yours.ars http://arstechnica.com/telecom/news/2010/06/iphone-data-usag...
- matwood 16y agoI have no problem with charging for usage, but what I want is a flat rate per GB. Simply charge me $6/GB (rounded up is fine) and I would consider that fair for wireless network access. Of course the companies will never do this because I would only end up paying $6/month instead of the $25. I know ATT did their math and realized that most users are just above their lowest plan, but way below their highest plan. The goal is to push people into the higher plan and hope they use nowhere near that amount.
- ajg1977 16y ago"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.
- deleted 16y ago[deleted]
- thwarted 16y agoI frequently see two tiers of SMS pricing, either you get some block of messages that are included and scaled with the number of minutes you have, or unlimited.
- bonzoesc 16y agoBoth 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 16y agoAccording 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?
- matwood 16y agoSMS is it's own beast, but call minutes are already very cheap. I remember when 100 minutes was insanely expensive and now my only phone is a cell phone with enough minutes that I never think about it when I'm talking to someone. Carriers could compete on talk minute price, but they know that few people care. Those that do have already moved to something like Boost Mobile or one of the other low cost providers (most are owned by the big boys, so you could say they are already competing with lower prices just with a different brand). SMS messaging while a ripoff from a production cost standpoint is not all that bad from the consumer view. For $10-$15/month someone can do unlimited SMS. From a cost to communicate with anyone and everyone as often as someone likes standpoint that is a very cheap price. Also, people don't really care enough to move providers in order to save $5 when they would rather have either coverage, service or a certain phone. Are the carrier prices really artificially high? I will say they have some wiggle room, but they are walking a fine line of price they need to charge in order to build out the network across the entire US with the lastest tech and still somehow turn a little profit at the end of the day. Net Profit Margin for the 1Q of this year: VZ - 8.49% T - 8.36% S - (10.7%) Not exactly price gouging numbers above.
- deleted 16y ago[deleted]