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Paying a Premium

 
 
By Dave Sobel
 
 
 

I'm going to rant a little about data plans.

AT&T has made major changes to some of its data plans for coverage, with Verizon doing the same. Sprint is making similar changes. In an unrelated move, Starbucks is opening up its WiFi access points to be unlimited for customers within its stores.

Bandwidth is a funny thing. We talk about the ubiquitousness of bandwidth, particularly in the United States. (As anyone from Australia will remind you very quickly, it's not the case there.) We've come to expect to pay for usage, usually around time. You pay for a session when you're in a hotel or on the road; you pay monthly for your wired connection, with some level of speed caps involved. The expectation with mobile data plans has so far been the same.

The mobile carriers are now trying something new, by charging for usage rather than time.

There is some logic to pay-per-use. We pay for water and electricity both on a usage basis, but the usage fees are so low that your usage variation isn't something you notice. That's a critical difference. As anyone who has used international data plans before will tell you, overages in the past on the mobile carriers have been extraordinarily expensive.

If the perception of those "overage" or usage costs goes down to the point of being perceived as very small, there will be a massive shift. Water in your home is metered, but you don't think about its cost because that per-unit fee is so small.

The problem with this logic is that unlike water, and even dissimilar to electricity, bandwidth is not resource dependent in the same way. There is a finite amount of water in a very clear, measurable way. Bandwidth is less clear. What's the difference between downloading a book and downloading a movie? Does that statement change if I change the time?

For example, the availability of water doesn't change between me using it at 3 a.m. and me using it at 9 a.m. But try using your network provider in your home at 9 p.m. on a weekday, and compare to 4 a.m., and you find that bandwidth is in much greater supply.

The problem is that carriers are not able to handle concurrent users to the levels they demand. That, much more than usage, is the problem. Limiting usage doesn't entirely solve this problem, and if this trend becomes pervasive, it will slow adoption of cloud-based technologies.

More than being unconvinced charging purely on usage will solve the problem the carriers are hoping it will solve, they are making it difficult for those who are set up not to "think" about usage. I have no idea what my usage is on a regular basis. I don't even think about it. And frankly, I don't want to. I'll pay for unlimited usage, even at a premium, to ensure I don't have to. I'm grandfathered in with my data plans, but if I make any change, I no longer have that option. That is what I think is most problematic with the changes we're seeing—they aren't necessarily going to solve the problem the carriers want to solve, they don't respond to customers' desires for the way they want to be charged, and they potentially damage the adoption of other important technologies.

I just wish I had more choice as this happens.


This article was originally published on 2010-07-23