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2/7/2011
03:26 PM
Dave Methvin
Dave Methvin
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Carriers Sending Mixed Signals On Mobile Bandwidth

The hype over incredible 4G network speeds is undermined by the elimination of "unlimited" data plans and bandwidth limits on heavy users.

There have been some confusing messages coming from the mobile carriers lately. On television commercials, they all seem to be boasting about incredible 4G networks that let you watch videos of your favorite shows and sports events. Yet at the same time, they are taking away "unlimited access" plans (that were never really unlimited anyway), threatening to speed-limit some users, and playing damage-control with complaints about performance issues and dropped calls.

iPhone users have had a love-hate relationship with their phones for years. They mostly love the phone and apps they can use, but mostly hate the AT&T network. Or at least, most people tended to blame the problem on AT&T's network. Now that Verizon is getting the iPhone, we'll have a better idea of where the problems lie. But even before Verizon has the iPhone, they are taking preemptive measures, limiting the top five percent of bandwidth consumers to ensure that users don't get too jiggy with bandwidth. The company still offers an unlimited data plan, but of course it isn't that useful if you end up being throttled. This, of course, comes shortly after Verizon boasted that they didn't expect the iPhone to cause any problems on the company's network.

AT&T had already taken some measures to control smartphone data usage last year. They eliminated their unlimited data plan and instead now offer a 200-MB ($15/month) and a 2-GB ($25/month) plan with per-MB overage charges. The prices are somewhat lower than the original $30/month unlimited plan, so consistent light data users can actually come out ahead. If you need more than 2GB, though, you'll be paying $10 per extra GB. Users on the 200-MB plan get clobbered with $15 per extra 200MB, so it hurts to be wrong about your data usage.

All this assumes, of course, that you can get any signal at all. My own experience with the carriers in the Baltimore-Washington area has been disappointing. My home neighborhood is one giant Verizon dead zone, zero bars. Walk one block and the signal isn't bad, but that doesn't help when you want to receive calls in the house. For that reason I am on T-Mobile, which has good signal at the house plus reasonable prices and great customer service. But T-Mobile also has several dead spots at my daughter's college just outside Washington DC, so she is on AT&T. So much for family plan discounts.

On one hand, you can see the carrier's justification for tiered pricing on bandwidth. After all, there are many people who use their phones lightly, and it seems unfair to have the very heavy users pay the same price as those light users. But the distinction of light and heavy user is difficult to draw when so many new and innovative applications are being created that may need to communicate over the air. It's especially galling to see the ads show high-bandwidth services like video; a heavy video user could easily burn through their bandwidth. All the carriers need to be upgrading their networks to improve service and eliminate dead spots, but it seems like they're spending at least as much to advertise service and performance levels they're struggling to provide. They should stop advertising 4G networks until those networks actually exist.

If mobile applications continue to increase their bandwidth usage, as they most likely will, the carriers will either raise prices on users or simply limit their bandwidth once they reach a certain level. That signals to me that the carriers either want to simply increase their profits with no additional investment or mask the inadequacies of their networks by throttling the users who need the bandwidth the most. I wouldn't expect the pricing story on data to end any more fairly than it did for pricing on voice minutes or text messages, both of which are engineered to provide an ostensible choice to customers but don't offer any true low-end option. At least with those services the demand isn't skyrocketing the way it is with data.

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