The Odd Variations On 3G Per-Megabyte Pricing

GMGruman writes "Carriers are increasingly charging for 3G mobile access by the megabyte, to prevent 'unfair' subsidies of heavy users by everyone else. So why does the price of a 3G megabyte vary based on the device used to send or receive it? Why is an iPad megabyte cheaper than a MiFi one? After all, a megabyte is a megabyte as far as the network is concerned. InfoWorld has a comparison of 3G pricing for the four major US carriers for their various supported devices, so you can see whose 3G pricing is out of whack for which devices."

Comments

Fascinating

[Ltap]

The best way to undermine a broken, corrupt system is to draw attention to the inconsistencies in its operation.

Re:Fascinating

[Monkeedude1212]

The best way to undermine a broken, corrupt system is to draw attention to the inconsistencies in its operation.

Funny! That's also how my first marriage ended!

Re:Fascinating

[pesho]

This is how telecom companies get to charge arbitrary rates under the guise of offering 'more choices for consumers'. They have practically put an 'abstraction layer' that makes it difficult for consumers to make decisions based on service and price.

Re:Fascinating

[mattack2]

Unfortunately, it hasn't worked for "The Daily Show". (That's one of the things that makes me mad watching the show -- they point out the inconsistencies/hypocrisy, with video clips, that the nightly news shows should be doing!)

Re:Fascinating

[Anonymous Coward]

I've never seen them claim that's the reason, and according to TFA they decline to give a reason. To be honest, it's fairly reasonable to me from their perspective. They determine the market(s) they're looking to court, and tailor their plans to favor the devices desired by those markets. This is the free market at work and in my mind it's actually working here. Consumers have a variety of choices while the carriers still get to manage their networks as they see fit.

Re:Fascinating

[Anonymous Coward]

Yeah, I guess this explains why AT&T has a hard-on for catching tethered iPhone users. Not only do they miss the base up-charge for tethering, but the data costs are like 18x's more expensive if you're using a laptop.

Re:Fascinating

[timeOday]

Dilbert coined the term confusopoly for this: "a group of companies with similar products who intentionally confuse customers instead of competing on price."

Obama advanced Elizabeth Warren for the new Consumer Financial Protection Bureau, and she has railed against this problem for years: "Today, the big banks churn out page after page of incomprehensible fine print to obscure the cost and risks of checking accounts, credit cards, mortgages and other financial products. The result is that consumers can't make direct product comparisons, markets aren't competitive, and costs are higher."

It's not hard to see the tie between confusopoly and the mortgage meltdown that wrecked the economy, either - and here I include not only under-educated sub-prime borrowers, but bankers creating and selling complex derivatives that were not well understood by ratings agencies, regulators, nor even the bankers themselves.

However, Republicans slammed the bill creating the CFPB as "a government takeover of the economy. The President and Democrats today gave financial regulators the power to create years worth of financial uncertainty, which will only lead to more struggling businesses and fewer jobs." Just as with the Credit Card Reform Act of 2009.

Re:Fascinating

[epine]

I hadn't come across the term confusopoly. The other day I commented that lately rather than reading Dilbert, I check up on the developer blog at Open Pandora.

Market discipline (and invisible hand enlightenment) depend crucially on transactions between rational, well informed parties.

The prime order of business in a mature firm is to escape market discipline. Market discipline entails the risk of failure if you decide poorly. Who wants that, if you can avoid it?

I've spent far too much time in the past delving into the confusopoly of video cards. By the time a card gets a solid reputation for price/performance, out with the old, in with the new. Amazing what two determined firms can spin from essentially eight core chipsets (old|new lithography * bargain|enthusiast * AMD|NVidia).

In the Quandroid article the other day, it was observed that with so many players, the difference between good and great is a warehouse of unsold inventory, so companies are going to face a lot of pressure establishing zero-to-sixty supply chains to minimize inventory at risk. Confusolopies help to blunt this risk, by enabling sell-though before the market achieves product consensus. The movie studios do this all the time. They were none to0 happy about people in the early seating on opening night tweeting suck factor to their friends standing in line for the late seating. The objective is that the opening weekend depends entirely on hype rather that quality.

It's hard to equalize market share on the price signal when the price signal announces "you'll regret living the next two hours of your life" if you buy this discount ticket.

I first became aware of the complexity on both sides when a feminist GF back in the 1980s complained that women's shirts cost more to dry clean than men's shirts, ever if the garments were extremely similar.

I thought about that for a moment. My garments would have to be dry cleaned by gremlins for me to bother going back to complain that it was worse for wear. I suspect that young women are more demanding customers.

The same holds true for cell phones. Not all phone users are created equal. If this bugs you, I'm sure the feminists will be happy to strike up a deal on hair stylist and undergarment price equity.

I don't have a problem with corporations using price as a tool to minimize risk in their supply chain. I do have a problem when the contracts are so complex, the customer doesn't fully understand what that price is.

The purpose of fine print rarely promotes free market virtue, but instead functions to escape market discipline.

I wish we had different terms for different types of government regulation. Oppressive regulation is telling firms what price they can charge or what they can sell. Virtuous regulation is saying "we don't care what you sell, or how you price it, but the person you sell it to must understand what they've bought". You can't just sweep this under caveat emptor. In a mass market, you immediately end up with rational ignorance which benefits the larger party in the exchange and sabotagues informed commerce.

Shafting the customer with a crappy product sold at a premium price, that's OK, if the customer was dumb enough to bite. Bamboozling the customer to misunderstand the price actually paid or the product actually received, not OK.

For the shafted, once bitten, twice shy. This is good. For the bamboozled, never start an argument with someone who buys their ink by the barrel, prints walls of Latin in six point font that mutates monthly, and outsources telephone support to India. Instead of crap inventory rotting unsold in a Chinese warehouse, your society's human capital rots on the vine to India, or gives up and Fedex's the worthless junk to landfill.

The entire premise of free markets is to reward virtue. The entire premise of bamboozlement is for entrenched mediocrity to escape market discipline. Enron and the derivatives market as a whole were primarily exercises in bamboozlement, not just to escape market discipline, but to escape market discipline on the road to windfall profits.

Re:Fascinating

[Culture20]

I first became aware of the complexity on both sides when a feminist GF back in the 1980s complained that women's shirts cost more to dry clean than men's shirts, ever if the garments were extremely similar. I thought about that for a moment. My garments would have to be dry cleaned by gremlins for me to bother going back to complain that it was worse for wear.

Would you care more about the quality if it were to cost more? I complain about poor food and service at sit down restaurants, but don't care at fast food places. When I pay more, I expect more.

Re:Fascinating

[SimonInOz]

Of course, if you really want to look at high charges, have a look at charges for messaging (texting, SMS). Here (Oz) carriers charge up to 20 cents (US dollar is about the same these days) for a message.

It's, what, 140 bytes. Hmm, that works out at $1,428,571 per megabyte.

Now that's what I call a profit margin!

Re:Fascinating

[Anonymous Coward]

under-educated sub-prime borrowers

You mean the people that got loans such that the only way they weren't going to get raped is if the economy kept growing at 10%?

bankers creating and selling complex derivatives that were not well understood by ratings agencies, regulators, nor even the bankers themselves.

You mean the bankers that fraudulently re-bundled high-risk loans into low-risk packages?

Both the bankers and the borrowers knew exactly what they were doing.
And the re-bundling the banks were doing was already illegal (no need for more regs).

Re:Fascinating

[AvitarX]

Most made sense to me.

Someone has a phone with a 250MB cap is likely to use less than someone with the tablet (the only reason I can see where the network would consider the tablet equivalent is if they actually like to rape the customers with overages. Honestly the fact that the price is more is to me evidence that the overages are not intended.

Where there were per MB charges (overages) the prices were fairly consistent, with a couple exceptions.

I think the authors premise that buying a 250MB/month plan is buying a set amount of data is false, it is only a set amount of data if you can keep it until it runs out and buys more. It is perfectly logical that different devices would have different use patterns, meaning that on average more or less data would be used.

Re:Fascinating

[AvitarX]

I've never seen a woman's suit, or shirt that was near as easy to iron as a man's. Women have pleasant shapes to them, and it makes their clothing less large, flat surfaces, and more darts and other things to give it a shape. And with the equipment that cleaners have the difference is even more dramatic.

Also women's suites are often poorer quality fabrics that may make a cleaners job harder (or maybe easier, as they are often synthetic). Additionally even something that is fairly similar between the two, say a sweater, the woman's is likely to be a softer material than the man's (though most cleaners I've been to don't distinguish sweaters).

Things that are the same are definitely not charged differently (hats, gloves, scarves).

Re:Fascinating

[chrish]

Text messages are $0.50 each to send or receive in Canada. So very awesome having a three-way confusopoly controlling 95% of the market.

It's even worse when you learn that texts are max 160 bytes because that's the amount of space left in the packets your phone is sending to the tower anyway (see this article). They cost absolutely nothing in terms of bandwidth. 100% profit.

Re:Fascinating

[FuzzyDave]

I'll bite when there's legislation promoting readability at the government level first. I've had several different answers from the IRS hotline on non-trivial filing questions. Let's shoot for a world where anyone with a 120 IQ can understand the laws, tax codes, regulations first.

Profit!

[Pharmboy]

Look, these are businesses which are in business to make a profit. No business sets their price based solely on cost of good. It is determined by supply and demand, what the market will bare, and what competitors are charging. If we start getting into telling businesses what to charge, according to OUR ideas of what is fair, well, that isn't capitalism. Don't like your carrier? Change. What we need to do is get rid of contracts and open up the marketplace, not tell companies what to charge.

Capitalism IS a self-correcting system. It isn't instantaneous, but given a level playing field, it is fair.

Re:Profit!

[Monkeedude1212]

What happens when all the carriers get together and say "I think a Megabyte is worth a dollar more?"

Re:Profit!

[h4rr4r]

No, what we need is to standardize the technology used so customers can easily switch carriers, outlaw carrier locking of phones once the phone is paid for, and require carriers to sell transport to each other at reasonable rates. This would allow meaningful competition.

Re:Profit!

[Ltap]

We're seeing that now. This happens in retail, manufacturing, virtually every industry out there.

Re:Profit!

[Anonymous Coward]

Then I open a new carrier charging less and run them all out of buisness.

Re:Profit!

[iammani]

You are welcome to try!

Re:Profit!

[MBCook]

Supply and demand doesn't work when supply is constrained by the government and one sided contracts lock demand so that it can't chose another supplier if being taken advantage of.

Capitalism IS a self-correcting system. It isn't instantaneous, but given a level playing field, it is fair.

Emphasis mine.

Re:Profit!

[StikyPad]

goodluckwiththatsir

Re:Profit!

[Anonymous Coward]

In that case all other carries will act quickly to lower their rates before they loose any large chunk of customers or alternativley you just join them in price fixing and increase your revenue.

Re:Profit!

[Anonymous Coward]

Look at the price it cost a consumer to send a single text message (and in a lot of cases the price it cost the consumer receiving the same text message) and compare with what the actual usage cost is, and then tell me if it is fair just because the telecom can set their own prices? Especially since all of them charge pretty much the same. There really isn't that much competition between them that is fair towards the consumers. Only fair to their extra high profits.

Re:Profit!

[BStroms]

I don't mind the contracts so much. You don't have to renew them when they're up (granted you'll be paying a monthly fee that's priced as if you had your phone subsidized.) And there are carriers out there that don't require any contracts at all, so you have options. What they really need to do is expand Wireless Local Number Portability. As it is, those of us who have moved out of our original Area Code are stuck with our carrier unless we want to go through the nightmare of changing our phone number.

Honestly, with more and more people ditching landlines and long distance calls becoming a thing of the past, I think we should get rid of region based area codes completely. Just give numbers to whoever wants them regardless of where they live.

Re:Profit!

[Monkeedude1212]

So why haven't you done that yet?

I mean you'll make tons of money and the world will be a happier place.

Re:Profit!

[0xdeadbeef]

If we start getting into telling businesses what to charge, according to OUR ideas of what is fair, well, that isn't capitalism.

What we need to do is get rid of contracts and open up the marketplace

Who the fuck do you think you are, telling companies how to run their business? You'll get a contract and an oligopoly and you'll like it!

Re:Profit!

[Nevo]

Antitrust lawsuits start flying.

Re:Profit!

[Anonymous Coward]

Sorry, you fail in your understanding of a free market system.

Any market where the exchange of some fungible good is restricted by artificial rules is not a free market. In this case bandwidth bought for device X cannot be transfered to device Y, or to person Z. This prevents price arbitrage and price discovery ensuring that the market price of the good remains under the control of the seller(s).

We don't need to tell companies what to charge. We need to tell them they don't get to set conditions to restrict the marketplace for their product! If I buy bandwidth I can use it however I want, with whatever device I want and I can resell it to whoever I want.

You have be brain washed into thinking that a consumer having a choice is the pinnacle of capitalism when that isn't even the most important of many necessary conditions.

Re:Profit!

[freedumb2000]

In Germany a government body regulates the peering rates which recently moved from around 7c to around 3,4c a minute. Supposdly the rest of the E.U. charges similar rates. Does anything like that exist in the U.S.?

Re:Profit!

[Lilith's Heart-shape]

Then we demand that the gorram Feds enforce the relevant anti-trust laws on pain of lynching.

Re:Profit!

[h4rr4r]

Not in the least.

Our system is totally to the benefit of the wireless carriers. We even have GSM and CDMA carriers to ensure that phone portability is as limited as possible. The only major carrier that offers to unlock phones once they are paid for is one you probably have heard of, T-Mobile.

When comparing regulation between two Germany and the USA it is always like this.

Re:Profit!

[Pharmboy]

You have be brain washed into thinking that a consumer having a choice is the pinnacle of capitalism

No, Mr. Knowitall, a free market is where those who are selling a good have equal access to the market place, ie: a level playing field in which to participate, like I said. /me thinks you spent too much time in college and not enough time actually owning and managing businesses.

Re:Profit!

[MoonBuggy]

It is determined by supply and demand, what the market will bare, and what competitors are charging.

Yes, and articles like this do an excellent job of informing the customers, thus altering what the market will bare and altering the price. Although setting the price of a commodity (and any unit of data within a given carrier's network is identical, even if data service in general is not precisely so) based on who's buying it and for what purpose might increase profits for a while, but it hurts the brand image once customers start finding out - that's a big part of the free market too.

If we start getting into telling businesses what to charge, according to OUR ideas of what is fair, well, that isn't capitalism.

Enforcing it by law isn't capitalism, but I don't see anyone suggesting that. Demanding it as customers is entirely reasonable - the companies don't have to listen, of course, but then the customer can follow your advice and change carrier.

Re:Profit!

[MozeeToby]

Supply: Cell network can support X Megabytes per second, at Y cost.
Demand: User asks for 1 Megabyte worth of data.

I don't see where what particular device I'm using to demand that data comes into play on the supply/demand curve. Maybe I'm missing it. The obvious exceptions would be if they are connecting to the network in different ways, LTE vs 3g for example.

Re:Profit!

[lwsimon]

If they lower their rates, then everyone is happy except the new guy, who goes out of business. If rates are raised again, someone else will try it, and down they come again.

If the new guy fixes prices, then he is vulnerable to the same issue - another new guy can undercut him severely.

Pricing is a raise to break-even. It's inescapable, without the influence of government.

Re:Profit!

[Amouth]

and nothing of consequence happens from them..

the record industry got caught price fixing for a decade.. what happened? customers got leftover payola crap as a payout - and the they keep right on doing it.

the idea of free market means i should be able to come in and undercut them.. but MaBell is what you call too big to fight via startup.. and it doesn't help that even if you can fight them in the market place they are more than happy to get their in pocket politics to help their fight and make what ever you are doing wrong..

just take a look at Greenlight NC and the crap they are going through.

Re:Profit!

[Maxo-Texas]

Now that's even more ridiculous. Once again pretty females probably get the best rate.
First they can go into a club when they don't meet dress code, and now they get a bigger discount depending on what they bare.

Re:Profit!

[MobyDisk]

That's called collusion and it is illegal in the US and EU.

Re:Profit!

[Monkeedude1212]

Which is entirely uncapitalistic I must say!

Re:Profit!

[MoonBuggy]

Just out of interest, how does having an area code from one place affect your use of the phone in another? I know US mobile phones have geographic area codes (as opposed to the UK ones which have a specific '07' area code prefix signifying mobile) but I thought it was just for administrative convenience?

Re:Profit!

[Qzukk]

except the new guy, who goes out of business

And the banks and venture capitalists that fronted the money for this fool's errand.

If rates are raised again, someone else will try it

Good luck getting the banks and venture capitalists to front the money for the fool's errand the second time around.

Re:Profit!

[Pharmboy]

I don't see where what particular device I'm using to demand that data comes into play on the supply/demand curve.

Yes, that is the problem, you don't see it. Demand isn't a two dimensional thing, nor is it calculated only by the MB. It is based upon the number of people wanting a very particular service vs. the ability of all the competition to provide it. It is modified further by raising prices on overages at whatever level they want to set, intentionally dampening demand to a level that is most profitable to serve. At that point, they adjust the supply to fit that demand.

Business is a lot more complicated than "I buy a widget for $1 and sell it for $2, I can spend $1 profit", particularly when you are talking about a cut throat multi-billion dollar industry that demands constant upgrading of equipment on a daily basis, and planning for the future with equipment that hasn't been invented yet.

Re:Profit!

[Sancho]

You have to get new service using a geographically local area code, and you can't port your number to a new carrier unless your number is geographically local to you.

You can use Google Voice to maintain carrier neutrality (mostly) but that comes with its own set of headaches.

Re:Profit!

[hackwrench]

Sorry, you fail in your understanding of a free market system.

You say that and then use terms that someone who fails in their understanding woudn't be familiar with?

Re:Profit!

[j-beda]

Pricing is a raise to break-even. It's inescapable, without the influence of government.

And with the customer having perfect knowledge, and with all possible suppliers having equal access to capitol and no artificial barriers to entry into the market.

Of course with any finite system, without some form of regulation to prevent it, the entity with the control of the largest amount of capitol always "wins" in any multi-round commerce game. Once a monopoly grows, they can almost always maintain and expand it into other areas. If nobody else can raise enough money to build the towers, you cannot start a new cell phone company. And how can you convince a lender to lend to you if you plan on competing based on price against an already established player who can easily drop their prices until you go bankrupt? Yes, someone else could come along again to try to compete on price but they will have a tougher time finding a lender (the last lender lost their shirt remember?) and meanwhile the established player has more money than last time in order to temporarily "compete" with the newcomer.

Don't get me wrong - "artificial" intervention is very often harmful, but in my opinion is also very often necessary to provide the type of ecconomic environment we want to live in.

Re:Profit!

[Sancho]

It's just like with Cable/DSL. The provider oversells their pipes and charges based upon making a profit from the average user. They take a slight loss on the people who use loads of bandwidth, but make it up in spades on just about everyone else. The cost you see on your phone bill (e.g. $25/mo for a 5GB plan) is based upon the expected usage of smartphones (way less than 5GB.)

Laptops are expected to use more of the provisioned data, so the companies would be taking a loss on most laptop plans if they were billed at the same rate as the smartphone data plans.

Re:Profit!

[puto]

ATT has unlocked phones for years. All you had to do was well ask. I worked in tech support there until 2006 and we we used to process requests and send out unlock codes on daily basis. In 2009 I moved to south america, and called ATT and requested an unlock code for my Samsung Blackjack, and they sent it out to me in two days via email. And if you had an contract phone, and an account in good standing for at least 90 days, you could request and get an unlock code if you were going to travel abroad. The only phone you could not get an unlock code in recent history was the Iphone.

Re:Profit!

[AltairDusk]

This is about the only way I can see cellphones actually working as a free market. The market as it stands currently is broken.

Re:Profit!

[Anonymous Coward]

T-Mobile is Deutsche Telekom. You know, "deutsche", as in Deutscheland.

Re:Profit!

[hedwards]

Area codes are just a geographic grouping of numbers. Those are the first 3 numbers following the 1 on a long distance call. The next 3 after that are the exchange and the last 4 are just to make it unique. One of the issues we have is that you can't be sure if a call is going to be long distance by looking at it. Around here both 206 and 425 can be local calls or they can be long distance as well depending upon the specifics.

There used to be a rough grouping by exchange, that doesn't seem to be the case any more. Trying to make much sense out of the numbers is largely futile as it isn't particularly orderly and the numbers aren't handed out by any particular single party. In a sense it's worse now than it used to be now that we've got telephone number portability, allowing you to take a phone number from one company to another.

If we had to do it over there's a few things which we would probably do differently, one of them is assign area codes in a way that roughly corresponds in some predictable way to the part of the country they're listed in. As it is, the 205, 206 and 207 area codes represent parts Alabama, Washington and Maine respectively. It would be difficult to find much more spread geographically for sequential numbers.

Re:Profit!

[h4rr4r]

and get an unlock code if you were going to travel abroad.

T-mobile does not require you to be leaving the country to let you use your owned property with another carrier. Why does traveling abroad enter into it?

Out of fairness I will say my current carrier is verizon, and I will most likely be leaving them soon as they seem unwilling to have any flashable android devices nor moblin/meego on their network.

Re:Profit!

[Anonymous Coward]

ahh, a good old fashioned conspiracy.

nothing of consequence will happen. It currently happens with the mpaa/riaa and nothing came from it. It happens with the oil companies but they use the futures market as an excuse to all set the same price. Retailers do it from time to time too, but usually it is more of, 'if i put this item at this price i'll let you put that item at that price without competing' sort of thing, so they rarely get caught. It happens with insurance companies too. And even worse: pharmaceuticals.

If large multinational corporations have taught us anything is that they are above the law. I dare you to do something about it.

Re:Profit!

[Wocka_Wocka]

[W]hat the market will bare. . .

Those naked markets are pretty awesome.

Re:Profit!

[swb]

What we need is a highly regulated (electric & gas utility style) monopoly that runs the towers & backhaul. They will sell their minutes at a tarrif-regulated price, in bulk, to the resellers who actually provide dial tone, voice mail, customer service and whatever other bullshit data features they want to sell (VZW Apps, media, etc).

In some ways it'd be like Apple's iPhone and the app store relative to AT&T -- Apple is the reseller of those items, AT&T kind of just provides backhaul for the apps.

Re:Profit!

[h4rr4r]

That was why I stated he had probably heard of it.

Thank you for adding nothing of value to the conversation.

Re:Profit!

[HeckRuler]

If we start getting into telling businesses what to charge, according to OUR ideas of what is fair. Don't like your carrier? Change. That IS capitalism

Fixed it for you. I think you meant to say "if the government starts getting into telling businesses..."
We the people, on the other hand, ARE exactly one half of the capitalism equation.

Re:Profit!

[h4rr4r]

The correct way to do it would be by using something like DNS. That way the number behind it all could change and no one would have to know about it

Re:Profit!

[Pharmboy]

the record industry got caught price fixing for a decade.. what happened?

The internet happened, and now most music is "bought" for free. Again, the system isn't instantaneous, but just like karma, it tends to catch up with people.

Re:Profit!

[Anonymous Coward]

Yeah they seem great about unlocking phones if you ignore all the times they don't. You could apply the same logic to anything and come up with a favorable opinion.

It's not like the iphone has sold millions and is a non-trivial percentage of AT&Ts userbase or anything.

Re:Profit!

[Sancho]

If we had it to do all over again with today's technology.

Area codes (and prefixes) were allocated based upon population and with respect to rotary phones and mechanical switching equipment. Areas with high population got area codes with the most small numbers (except for 0) because on a rotary dial phone, shorter numbers means that the call can be connected more quickly. Connecting a call more quickly means that the switching equipment is tied up for less time. That is why 0 wasn't used as much--it's the last number on the rotary dial, and thus takes the longest to use. And since high-population areas are expected to be called more frequently, it made a great deal of sense to minimize the connection time to these places.

Re:Profit!

[sjames]

However, according to the cult of the market, the "Invisible Hand" is supposed to push the retail cost down to the cost of production.

That tells us that the telecoms market is quite unhealthy in the U.S. OR that the theory of markets is wrong.

The problem has been around for as long as phones could actually use data and shows no signs of correction. If the market can't correct any faster than that, it's worthless.

Re:Profit!

[sjames]

This is more evidence that our carriers are , in fact, a confusopoly.

Re:Profit!

[Anonymous Coward]

I've been a t-mobile customer for more than 8 years. Only had a contract my first year. Not only do they have great customer service (really, they do) they also have some of the best rates. I especially like their solution to going over the 5 GB barrier. They slow you down instead of charging you a fortune.

I did once have a sizable overage charge when I was out in the boonies and didn't realize that t-mobile to t-mobile didn't count when roaming. Fair enough. That was more than 5 years ago.

It is worth noting that T-mobile is Deutsche Telekom (aka German Telecomm) which explains why they are the closest to the European model.

Re:Profit!

[meloneg]

but MaBell is what you call too big to fight via startup..

Um, you might want to re-think your example. Not only is she one of the few examples of anti-trust action actually having a major impact on a huge corporation in US history, her entire profit-model prior to 1984 was ripped to shreds by MCI.

Further, it's one of the *very* few examples of government-intervention having a solid, clear benefit to consumers in all of history. I wouldn't be typing this post on the modern internet and people would definitely not be reading it on their smartphones without that case.

Re:Profit!

[Bigjeff5]

If they get together and do that, it's price fixing, and can cost them tens of millions of dollars in fines, and possibly jail time (not likely though). Proving such a thing is difficult, but it has happened before.

However, if there is not enough competition it is fairly easy to come to unspoken agreements on price.

For example*, if there are only two gas stations in town and the price of oil drops, each gas station owner has two options: drop the price of their gas in order to drive more customers to their station and steal customers from his competitor, or he can sit on his current price and wait until his competitor makes a move to lower the price.

If both station owners do the latter, chances are they both make more money than if either of them moved first. They both see the benefits of this, so neither drops the price. They didn't have to get together to agree on a price, they managed to do it without saying a word.

This doesn't usually work with three or four competitors. In that case it isn't a 50/50 split, and it is possible for the first station owner to drop his prices to double or more his number of customers by doing so. That's a very lucrative possibility, and someone always jumps on it (the more competition the quicker it happens). This is the essence of how fair competition seeks the lowest possible price for a given good or service.

In the case of cell phones, you have basically 4 competitors nation wide, and their operating areas don't overlap by more than two competitors in most areas. For large metropolitan areas this isn't the case, but in most non-metropolitan (and even in a number of metropolitan areas) there are only two competitors. Large metropolitan areas tend to have the most competitive plans, too.

This means the pricing takes a long time to get to where it should be, and in some cases it never gets all the way there.

*This example assumes the gas stations in question get most of their money from gas. In reality this is rarely the case, but it's an analogy, deal with it.

Re:Profit!

[thegarbz]

Unfortunately your idealism of supply and demand changes dramatically under your typical duopoly / oligopoly telecoms markets. The supply and demand curve picks one price point, however when all carriers equally overchage a new line is drawn to the left of the curve. The supply price and demand price as a result have a wild disconnect that only a true free market or heavy price regulation can bring back to it's equilibrium. This is something that can't ever change by itself due to incredible barriers of entry into the industry. You can't go out tomorrow and say I'm going to build a telecom network to compete with AT&T. You don't have the resources. As such even if you completely eliminate contracts the market place can't be open on account of the ludicrous cost of entering the marketplace.

So tell me, my contract just expired so I'm free to choose, which off the carriers in TFA have equal pricing for both 3G mobile and 3G internet? If your answer was none, then hopefully you start to see my point.

Re:Profit!

[rrossman2]

I agree and take it one step further. Why, oh why, aren't cell phone companies required to unlock the phones? Such as, if I pay Verizon outright for a BlackBerry Storm, why aren't they required to unlock the SIM so I can use whatever SIM I want? As is, you have to call the business support number and tell them you're heading over seas and are being given a prepaid SIM card, and then if they buy that they'll check your past credit with them and how long you've had them.

I understand for phones purchased at a discount with a 1 or 2 year contract, but why aren't they required to unlock the phone AFTER the contract is up and they've made back the full price of the phone and then some? That's why I like Immix Wireless. Even though they are small, and only cover a few counties in Pennsylvania (they have roaming agreements with ATT, T-Mobile and others) their phones come unlocked even with doing a 2 year agreement. I think all carriers should do that or at least be forced to unlock them after your contract is up.

Re:Profit!

[Anonymous Coward]

News to me. I called and asked for the unlock code. I walked into one of their stores and asked for the unlock code. No can do both times.

Re:Profit!

[aczisny]

I'm confused. This is a solved problem already. You go to the new carrier and say "Hi, I'd like to open a new account and keep my current number" and they make that happen. In fact, I just did this a few months ago when combining wireless accounts with my wife. I kept my Maryland number and she kept her Oregon number and I was the one who changed carriers. You can keep your current number, even when crossing geos and changing carriers. I think they did at one point pitch a fit about this, but no longer.

Re:Profit!

[psithurism]

All the carriers get together

In my area, that would be Verizon teaming with uh...Verizon. We better keep those two apart.

To be fair AT&T is around, but their coverage sucks.

Re:Profit!

[Sancho]

Good to know that's been addressed. As recent as January of 2008, I know first-hand of a telco who refused to port.

Re:Profit!

[tepples]

the entity with the control of the largest amount of capitol always "wins" in any multi-round commerce game.

I assume you meant "capital", but "Capitol" is an apt Freudian slip given that once you have enough capital, you can buy legislators.

Re:Profit!

[falconwolf]

However, according to the cult of the market, the "Invisible Hand" is supposed to push the retail cost down to the cost of production.

That tells us that the telecoms market is quite unhealthy in the U.S. OR that the theory of markets is wrong.

There is no free market when there is government interference in said markets. And there is most definitely government interference in these markets.

The problem has been around for as long as phones could actually use data and shows no signs of correction. If the market can't correct any faster than that, it's worthless.

You're right, it's been around as long as phones have been and the problems will continue until the government stops interfering. Yes, interfering. First government gave monopolies to land-line companies like ATT and to mass media broadcasters like Fox and Clear Channel. I know, I know, Fox and Clear Channel are relatively new at broadcasting.

Falcon

Re:Profit!

[sjames]

Anarchy it is then!

Re:Profit!

[Anonymous Coward]

Not to be pedantic, but I've had an iPhone, sometimes under contract and sometimes not, since 2007, so speaking as one individual customer, they haven't unlocked my phone "for years."

Re:Profit!

[HeronBlademaster]

I don't know about porting to a new carrier, but AT&T's service is nationwide, and they don't care if your area code matches your billing address once you're signed up. My cell number has a Utah area code, and I live in Washington. I've upgraded my phone twice (with contract renewal) twice since I moved to Washington, the first of which I did while on vacation back in Utah (with my billing address long switched to Washington).

The only annoyance is that Washington locals won't want to call me from their land lines because it's long distance, but most everyone has a cell phone with free nationwide long distance nowadays.

Re:Profit!

[Atomic Fro]

It doesn't really affect anything other than land line use. Calling another area code usually results in higher "long distance" charges. Currently there is no long distance charges for cell phones. As an example, say you move from one corner of the country to the other. You keep your mobile phone number so it still has the area code from where your family and friends are. They can call you on the land line all they want and they won't incur long distance charges even though you are 2000 miles away. On the other hand, when your new friends there try to call you from the land line, they will have to pay long distance. No problem if they call on a mobile.

Re:Profit!

[sjames]

Which government interference would you say is the problem? What should the government stop doing to improve the market?

Re:Profit!

[shentino]

In theory, the FTC would come down on them hard for price fixing.

In practice, a few regulators would be paid off to look the other way.

Re:Profit!

[shentino]

If the government doesn't regulate the market, a monopoly will dominate it.

Re:Profit!

[Anonymous Coward]

The problem is that the practices FCC employs with wireless carriers (frequency allocation and requirements on technologies operators can use on these frequency bands) seem to be built to support "natural" monopolies. Or rather, I'd say, unnatural monopolies by letting operators implement as high barriers as possible to customers considering switch of contract provider, and FCC even assigning the frequency band allocation on basis of large chunks far from each other.

It's done quite the opposite way on European-style regulation: operators, in practice, are enforced to choose from a palette of single technology stack (GSM/UMTS/LTE) and share the same major frequency bands (900/1800/2100/2600). Basically all terminals are guaranteed in this way to interoperate with all the networks, and from the consumer perspective the competition (but also co-operation of companies) can function. I believe the contracts are also regulated in the sense that an operator can't discriminate terminals by requiring one sort of unlocked terminal to require more expensive contract than another, unless the consumer specifically wants one.

Doesn't the European model sound much more meaningful? That is, regulation in order to create competition that benefits the customer, instead of the US system where the whole system seems to be fine-tuned for creating profitable and clearly bound markets for the operators, at the expense of consumers?

Re:Profit!

[Smauler]

what the market will bare

I wasn't going go all grammar Nazi, but since this was repeated, I figured I would. The word is "bear", as in I can't bear any more naked markets

Re:Profit!

[j-beda]

Yeah, I meant that. Really. OK, no.

Re:Profit!

[TheRaven64]

And get shouted down by the libertarians. You want the government medalling in the holy free market? Are you some kind of communist? Remember the libertarian mantra: It is the sole prerogative of corporations, and not government, to exploit the people.

Re:Profit!

[TheRaven64]

The only way that I can see it making a difference is in terms of usage patterns. People using a laptop for tethering will be more likely to use the laptop for a relatively short period, but will use more bandwidth over this time. In contrast, people with a smartphone will use less bandwidth, but for more time. It's probably slightly easier to correctly provision the smartphone users, because their usage patterns are more predictable. Of course, as smartphones become more capable, this is less true. Now that phones can do things like play back GooTube videos, they can be responsible for the same sort of bursty usage as tethered laptops.

Re:Profit!

[AvitarX]

Um, in my area there are a few small cellular options doing it fairly successfully, even getting a reputation of service that's spotty, but pretty damned good.

Metro PCS charges $50/month for unlimited voice and data, 3G, on a smartphone ($40 on a dumb one).

Additionally they have plans with unlimited calls to Mexico for $5 extra on the $50 plan, and $10 for unlimited international.

All with affordable phones, and no contracts.

Cricket is $55/month for the unlimited Android plan, affordable phones, not sure about contracts. (also hear less about there service, but my neighbor used a USB from them for internet and it was decent, and cheaper than cable. They throttle speed, don't charge you when you surpass the allotment.

These are pretty big steps and it kind-of reminds me of when T-Mobile came to my area (pretty good coverage, but not the best, 30% less than the competition, which T-mobile remains from what I can tell with $100 unlimited everything plans vs AT&T or Verizon $150). It's just T-mobile has grown, and now there's a new OK, not great coverage companies moving in at 30% less than them.

Re:Profit!

[Lilith's Heart-shape]

Without government, there can be no corporations. It's not like they get their corporate charters and their protection from liability out of a Cracker Jack box.

Re:Profit!

[sjames]

It would make more sense to have a common stack and frequency bands for many reasons, but the lack of it hardly explains the complete failure of the market here.

I believe the contracts are also regulated in the sense that an operator can't discriminate terminals by requiring one sort of unlocked terminal to require more expensive contract than another, unless the consumer specifically wants one.

I fully agree. So, more regulation (and more sensible) rather than less.

Re:Profit!

[Amouth]

the first time i fully agree.. but the current 2nd coming of MaBell that we are watching is what was talking about.. sorry if i wasn't clear about that.

Re:Profit!

[Anonymous Coward]

Let's don't start talking about "artificial" intervention being often harmful. The quality of execution will always depend on the person behind the wheel. It can outstrip private solutions if headed by a good leader, but it will of course be disastrous if he were a nincompoop.

Re:Profit!

[geminidomino]

What, you expect more consistency out of Libertarian political dogma than the other bullet-point driven ideologies?

(I do find it so amusing when they forget that little factoid, though...)

Re:Profit!

[Lilith's Heart-shape]

I'm an anarcho-capitalist. It would be silly of me to not know that corporations are legal constructs that date back to mercantilist Britain and beyond.

Re:Profit!

[j-beda]

Yeah, good think we would never elect nincompoops to public office, eh?

Re:Profit!

[jc42]

That's called collusion and it is illegal in the US and EU.

Well, here in the US, such laws are considered "government regulation", and both the major political parties are now run by people who don't believe in enforcing such things. They do like to keep such things on the books, so that they can use the above argument, trusting that most of the population will fail to distinguish having a law and enforcing the law.

Re:Profit!

[jc42]

It is determined by supply and demand, what the market will bare, ...

I was thinking that it's only a matter of time before someone introduced porn into this discussion.

Re:Profit!

[wwphx]

I can't say whether or not AT&T unlocks phones, I'll take your word for it. But when Alltel was bought out by Verizon, FTC blocked it in my area as anti-competitive (Southern NM). AT&T bought them out here. I go to switch my account to Verizon, and they won't let me use my old CDMA phone because it has an Alltel label. They won't reflash it. So I had to buy new phones, which of course then had to be reprogrammed with our address books. And no, they don't transfer phone books between models, which Alltel would do.

Unless all carriers unlock phones that are compatible, it doesn't do much good.

Re:Profit!

[geminidomino]

"Silly" seems to be the theme for every contemporary political movement.

Sincere question: What exactly IS an anarcho-capitalism, and how does it differ from Randroid "Libertarianism"?

Re:Profit!

[Lilith's Heart-shape]

Aside from the fact that unlike anarchocapitalists, Randroids and Libertarians are minarchists who favor a "night watchman" government that does nothing but enforce contracts, crack down on property crimes (murder, rape, theft, robbery, fraud, trespassing, etc.), and fend off invasions from other countries?

Re:Profit!

[geminidomino]

And anarchocapitalists favor the complete absence of government? (I'm guessing, since you didn't say).

Re:Profit!

[Lilith's Heart-shape]

Anarcho-capitalists are basically anarchists who like money and all the fun things money can buy, like hookers and blow. I'm surprised you didn't infer that from the "anarcho-" prefix.

Re:Profit!

[geminidomino]

If you look again, I actually did, I was just verifying my assumptions.

I'm not sure how you/they propose that such a system doesn't rapidly devolve into another feudalism, though.

Re:Profit!

[Lilith's Heart-shape]

I'm not sure how you/they propose that such a system doesn't rapidly devolve into another feudalism, though.

Call me cynical, but I don't think we've gotten away from feudalism in the first place. The basic social contract is still obedience to authority in exchange for the illusion of security. Citizens/subjects of a country are stuck in the country of their birth unless they are rich or have skills that the governments of another country want. Without the right to freely emigrate, you and I are still serfs. The politicians and their financial backers are our new aristocracy.

Re:Profit!

[geminidomino]

No argument here. So then what's the difference?

Because

[MrQuacker]

Because they can, and we let them. They are in it for the money, and this is a way to maximize it. While one flat rate set based on actual network costs + profit would be the most logical, thats never going to happen. The marketroids do not understand logic.

Re:Because

[natehoy]

Don't underestimate the marketroids. Most of them fully grasp that a flat rate would be more "logical" if their goal was to be fair. Their goal is not to be fair. Their goal is to extract the most money possible from you for the least possible cost. Making their plans simple and clear would be deeply, horribly illogical of them given their goal.

When I went to get my corporate Blackberry a couple of years ago, I had my choice of three models from Verizon and three from AT&T. Two of the models from each were equipped with GPS receivers and a bunch of nifty neato features. Both carriers claimed the phones were GPS-equipped. I did a little more research and my favorite Verizon model turned out to be delivered with the GPS locked to only their TeleNav service if you paid $10 a month.

I called a Verizon rep about this, and the conversation went sorta like this:

Me: I understand that you lock the GPS on your Curve 8300 units, is that correct?
Verizon Rep: Absolutely not! The GPS is fully available.
Me: So, I could download Google Maps for Blackberry and I'd have my location shown?
VR: Yes, location services are available in Google Maps. The location should calculate in seconds, and of course you need a data plan.
Me: What? GPS doesn't use data unless you enable Assisted-GPS. Can I use non-Assisted mode in areas I don't get coverage?
VR: No. You can't use the GPS with Google Maps, location services for that application are via cell triangulation.
Me: But, why can't it use the GPS?
VR: The GPS only works with TeleNav, our paid subscription service, which offers (blah blah blah more than Google Maps) all for only $10 a month.
Me: So if I paid the $10 a month for TeleNav, I could use the GPS built into my Blackberry with any application I wanted?
VR: Yes, I already said that location services are available to all applications.
Me: Great, so I don't need any extra hardware to unlock the GPS, just the TeleNav subscription?
VR: The GPS is not locked, sir. I told you that.
Me: Allow me to rephrase that. I don't need any extra hardware to use the GPS receiver built into my Blackberry to use, say, Google Maps or Blackstar, assuming I pay the $10 TeleNav fee?
VR: (sounding annoyed) Location services are availalable in all applications that support them.
Me: GPS-accuracy location services? As in approximately three meter accuracy with a good view of the sky under ideal conditions?
VR: (quite annoyed now) Of course you need extra hardware, you need an external bluetooth GPS puck to get the location from. We can sell you one with your phone for an extra $150.
Me: So the GPS itself can only be used with TeleNav, and no other applications, and only if I purchase TeleNav, right?
VR: (very piqued) I keep telling you, location services are available in all applications.
Me: Just not using the built-in GPS.
VR: Yes, the GPS works fine in all supported applications.
Me: Can you name a few of those supported applications, please?
VR: TeleNav.
Me: Any others?
VR: Location Services are available in Google Maps, Blackberry Maps, and a number of other...
Me: (interrupting) Please stop talking about location services, I want to know about the Global Positioning Satellite Receiver hardware built into my phone. Can I use that hardware with Google Maps, Blackberry Maps, or any application other than TeleNav, even if I purchase the $10 a month TeleNav subscrip...
VR: (interrupting) Of course not! The GPS is for TeleNav only. If you want a GPS of your own, you have to buy one. We won't just GIVE you one!

To me, this seemed a very illogical discussion. But to Verizon, this is a very logical conversation, because they wanted to get me into a two-year commitment with their phone so I'd be facing the decision

Re:Because

[thePowerOfGrayskull]

hey are in it for the money, and this is a way to maximize it. While one flat rate set based on actual network costs + profit would be the most logical, thats never going to happen. The marketroids do not understand logic.

They will charge what people are willing to pay, and that's the end of it. In that context, what they're doing is perfectly logical. Illogical would be charging a flat rate, when people would willingly pay premium rates for tiered pricing.

Re:Because

[mabhatter654]

the problem is not "one set fee". it's the ridiculous overage charges.

ATT's iPhone plan used to allow 5GB as "unlimited". Then they knocked $5 off the price and put a cap 60% of the original "product". THEN called it flexibility when they offered a 1/2 price plan with 5% of the data.

If ATT needed more money, they could have OFFERED more data for a higher price. You'll notice NONE of the bandwidth based operations do that. If service and data is (for example) $25 for 2GB, then why is the NEXT 2GB not "only" $20 more? That's how stuff in "real world" works. The ridiculous amounts like $1 per Megabyte (or $2000 for the same overage) is what the government needs to address. THAT is the real problem. The government also needs to address the fact that these companies charge amounts 100x the cost of a monthly bill with a straight face. If the company does a credit check, how can they justify those prices... throwing shit at a wall to see what sticks? Their whole model is built on low "monthly payments" then tricking people into using high profit items like information, overages, text-per-month charges, etc.

Re:Because

[Sancho]

Actually, on AT&T, the next 2GB is only $20 more. Actually, they meter by the 1GB for overages, and 1GB is $10. So the first 2GB you have to buy at $25, and every 1GB after that is $10 extra.

With the smaller package, you simply pay $15 per 200MB. That's ... pretty astounding, frankly. I hover right around 200MB per month, and so it turns out that I probably would save money by being on the smaller plan--it would average out. However there's something to be said for feeling secure in the knowledge that an app doesn't start using tons of data, unbeknownst to me, and cause my bill to skyrocket.

Re:Because

[falconwolf]

They will charge what people are willing to pay, and that's the end of it. In that context, what they're doing is perfectly logical. Illogical would be charging a flat rate, when people would willingly pay premium rates for tiered pricing.

If 10,000,000 sign up for a $10 service where only 10,000 sign up for a service costing $100, the logical price point is $10.

Of course that ignores variable costs. However if fixed costs plus variable costs per unit are below the lower price point then profits will be maximized at the lower price.

Falcon

Re:Because

[falconwolf]

The government also needs to address the fact that these companies charge amounts 100x the cost of a monthly bill with a straight face.

No what the government needs to address is the monopolies the government itself gave to these companies. Remove any and all artificial barriers to competition is what needs to be done. Remove easements or the exclusive use of right-of-ways and remove licensing requirements to transmit over the airwaves.

Falcon

Re:Because

[thePowerOfGrayskull]

On the other hand - as seems to be happening - when 10,000,00 sign up for a $100 service, why would they change the price to $10?

Re:Because

[falconwolf]

On the other hand - as seems to be happening - when 10,000,00 sign up for a $100 service, why would they change the price to $10?

One, has 10,000,00 signed up for these plans? And two might not a low cost competitor, a disruptive competitor such as cellphones are to land-line phones, upset even grandiose plans? Potential wireless providers could be very disruptive to large providers if licensing was not required.

Falcon

Re:Because

[thePowerOfGrayskull]

One, has 10,000,00 signed up for these plans?

Well - the estimate is something like 30% of the US market has smartphones - and nearly all smartphones require expensive data plans. It's not a stretch to say it's around 10m, though of course the plans aren't $100 in reality.

I'd agree re: competitors, but that comes down to infrastructure. There's little chance for a small player to get that in place to the point where they can actually compete on services and coverage. Not impossible.. just a lot of barriers.

And once they do, the guys with the expensive plans can certainly drop their prices. Once the newcomer is absorbed or out of business, back up they go...

I don't entirely disagree with your premise - I just think that the providers have done their research in determining current price points; and that they're probably getting close to an optimal balance between pricing and volume.

Re:Because

[falconwolf]

And once they do, the guys with the expensive plans can certainly drop their prices. Once the newcomer is absorbed or out of business, back up they go...

I don't think it would be as easy to drive newcomers out of business as you think, if there were a freemarket. The expensive part is the initial infrastructure setup, which as I stated elsewhere would not be expensive if it were not for licensing and regulations.

The internet has proven as much. Brick and mortar book and music stores (BMB&Ms) are going out of business because they can't compeat with the Apple iTunes music store or Amazon. And soon there will be another large competitor, Google. Google is about to open an e-book store. This tyme though small BMB&Ms stores will be able to sign up with Google too. Netflix has done the same with Blockbuster and other Brick and Mortar video stores.

I don't entirely disagree with your premise - I just think that the providers have done their research in determining current price points; and that they're probably getting close to an optimal balance between pricing and volume.

Like banks, hedge funds, and mortgage businesses I doubt they've done much research. Because I'm disabled and my disability is being screwed with I have to watch my money. I used shop at smaller local stores as I prefer to support them. When money started getting tight though I started shopping at lower cost stores like Walmart and Home Depot (for gardening supplies). When things got even tighter I started shopping online. I am a member of 2 local food co-ops but I'm about to start ordering food from Amazon.

So if I could, I'd jump on a low cost but reliable cellphone/wireless broadband provider(s) in an instant. And I'm sure there are others like me.

Falcon

Re:Because

[thePowerOfGrayskull]

Oh, don't get me wrong -I'd hop right onto a lower price plan as well (though I'm actually grandfathered into 30/mo unlimited 3G on AT&T ). It's just that I also need something that has coverage through at least the five states I usually travel through; no insane roaming rates for leaving those five states; and consistent, quality service. I can't see a startup offering that any time soon, not a lower price point. (And unfortunately, we don't have a free market... nor is there any chance of fewer regulations coming along...)

the interesting page is that one :

[godrik]

that's the one that actually contain the table your are looking for.

http://www.infoworld.com/d/mobilize/the-strange-unpredictable-pricing-3g-data-plans-485?page=0,2

Re:the interesting page is that one :

[SheeEttin]

http://www.infoworld.com/d/mobilize/the-strange-unpredictable-pricing-3g-data-plans-485?page=0,2

Page (0,2)? We're paginating in two dimensions now?!

Re:the interesting page is that one :

[bhmit1]

Where are they getting the prices for the smartphones in this table? For Sprint, I don't see anything resembling a $30 unlimited smartphone plan. The closest they have is a $70 plan with a 450 minute cap. Are they taking that plan and subtracting the 450 minute plan with no data for $40 to get the $30 for just the data? Something tells me you can't buy a plan like that. So while it's interesting for comparing data to data between carriers, it doesn't have a lot of practical use for anyone looking for the most affordable data plan.

Ref: http://shop.sprint.com/NASApp/onlinestore/en/Action/DisplayPlans?INTNAV=ATG:HE:Plans

Not all megabytes cost the same

[Anonymous Coward]

Transferring 1 1MiB chunk stresses the network a lot less than transferring 1024 1KiB chunks.

It makes sense to charge differently for devices with different usage patterns.

Re:Not all megabytes cost the same

[MrQuacker]

Ok, I am not a CS major, so please explain why that is? A packet is a packet, and all packets are the same size, no? If anything, transferring one 1MiB would take less packets because of the need for less routing overhead. The network "knows" that these X packets are all going to the same place. As opposed to sending 1024 1KiB packets, each of which needs routing appropriately.

Re:Not all megabytes cost the same

[SuricouRaven]

That's what he said. Well, most of the packets will be capped at 1500bytes for historical reasons. Sending 700 1500-byte packets is less demanding than 1024 1024-byte packets. Less demand on the routers, and timeslots are better utilised.

Voice goes seperatly in cells of 48 bytes for other historical reasons. The difference between a packet and a cell is the former is variably sized, while the latter is always exactly 48 bytes, no more, no less.

Re:Not all megabytes cost the same

[Nadaka]

You must be a first year CS major.

No. Not all packets are the same size.

a single large packet has has a header that tells the network where it is supposed to go.
1024 small packets each have a header of about the same size as the header of the large packet, for over a thousand times the overhead cost just in terms of bandwidth.

Re:Not all megabytes cost the same

[Sancho]

You two are in agreement. He said that 1 large chunk is easier to transfer than lots of small chunks.

A TCP packet has a minimum size of 64 bytes. That's with no payload (no real data beint sent.) If I have 1400 bytes that I want to send to someone, my device can choose to send 1400 65 byte packets (91000 bytes total including overhead, and not including acknowledgement packets.) It could also choose to send 1 1400 byte packet (1464 bytes, with the same caveats.) These are obviously the extreme cases--it could also choose a number somewhere in between.

Of course, it's a little worse than that. Some carriers meddle with the content you receive (most noticeable when they resize an image to make it smaller just before it hits the cell tower.) Sending lots of small packets means more work for that box, too, as it has to reassemble and keep track of more chunks.

Re:Not all megabytes cost the same

[c 0xFF]

But the usage patterns don't jive with their pricing.

I should preface this by saying that this is only a guess -- any rebuttals are welcome.

Let's start with web browsing. I'd say the usage pattern for each device is about the same, with the big difference being volume. The biggest difference would be for smartphones, which will have fewer large image files by visiting web sites optimized for a mobile device.

Next: email. I don't see a big difference here. Maybe fewer large files for smartphones and tablets by not downloading attachments.

How about streaming media? Movies and music will both come over in large packets, so the overhead should be minimal. I don't seen any significant difference between devices. But you're more likely to watch a movie on a tablet than the other devices.

What about apps? This is much harder to guess, but I would suppose that most mobile apps generally send lots of small packets, with an occasional large packet or two. That's what I'd expect from a game or weather app, at least.

So, I think it's clear that smartphones will tend to have smaller packets, on average, than the other devices. Doesn't this mean that smartphones stress the network more than the other devices? Shouldn't the price be higher for smartphones?

No, packet size is not the main factor here, even if I'm backwards in my thinking above. They charge different amounts because different devices are different markets. Even though the supply remains constant regardless of the device, the demand curves are very different. Why should we even expect the prices to be the same, then?

Tethering changes that. Allowing cell phone MBs to be used instead of USB modem MBs connects the two markets together and gives them the same demand curve. Everyone knows that the reason some carriers prevent tethering is because it prevents them from charging the premium for USB modem MBs.

Re:Not all megabytes cost the same

[Bigjeff5]

The network "knows" that these X packets are all going to the same place.

The network knows no such thing. It only knows where each individual packet is going, it has no concept of the entire cluster that is being sent.

Sending a 1mb saves about 9kb (about 6 full packets worth) of data compared to 1024 1kb files. That's 0.8% waste. Not exactly something to write home about.

Here is the breakdown: each packet for the 1mb download will hit the cap of roughly 1500b. With an overhead of 28 bytes per packet, that's 695 packets to transfer a 1mb file vs 1024 1kb files. The extra 28 bytes per packet for 329 packets amounts to just shy of 9kb. Packet loss applies equally to both groups so we can ignore it.

This figure doesn't change much even when you scale it up: for a 1gb file, just under 8mb is wasted. That's still about 0.8% waste (it's actually slightly better here).

Basically unless you are transferring tiny files approaching the 28 byte overhead, you aren't wasting much bandwidth at all - at 100 bytes 28% of your total data is overhead, but for 500 byte files it's about 5.6%, and at 1,000 bytes it's 2.8%.

To get an idea of how hard it is to get files that small, this post is roughly 1.15kb.

Re:Not all megabytes cost the same

[Bigjeff5]

It sounds bad, but it really isn't. The vast majority of packets sent are sent at the maximum 1500 MTU. This is because it is hard to get files that are smaller than 1500 bytes, so the only extra overhead for small files vs big files is the tail end of the smaller files.

It's very minor. 1024 1kb files transfers an extra 9kb of data due to overhead compared to a 1mb file. That's about 0.8% waste.

Even a 1gb file doesn't waste much - 1gb worth of 1kb files transfers an extra 8mb of data due to overhead compared to a 1gb file. That's about 0.76% waste (even better than compared to the 1mb file).

Unless you're transferring 100 byte files (which you're not - trust me) there just isn't much waste there.

Re:Not all megabytes cost the same

[MrQuacker]

Yeah yeah, I r noob. I read that wrong and though he was saying that 1Mb is more stress than 1024 1Kb.

Re:Not all megabytes cost the same

[Anonymous Coward]

Transferring 1 1MiB chunk stresses the network a lot less than transferring 1024 1KiB chunks.

It makes sense to charge differently for devices with different usage patterns.

But, surely they aren't charging you based on just the payload of the packet, right? They are charging you for the sum of all the packets including the headers, right? If so, then, you are already paying extra for transferring the data inefficiently.

Let's say I want to send a 255 character message vid UDP. I could send all that in one packet of N Bytes (where N is the minimum packet size including the header and padding and checksums and everything). Or I could send it 1 character at a time for a total of 255 packets of N bytes. So, at least in this case, if you charge by the total bytes transferred (including the headers), then you are already taking into account the issues with access patterns making the transfer inefficient.

If the routing overhead was really an issue, then they would just charge you based on the number of packets that you send or receive instead of their total size.

Re:Not all megabytes cost the same

[csboyer]

Eh, when you deal with the PHY layer (its a cell network) packets get a bit more confusing. They typically have to interleave pilot symbols (split up packets) into the data in order to demodulate with a better error rate and they tend to keep packets short in order to fast resource allocation amongst multiple users. Short packets help to keep the latency down. How TCP does things ignores how all the lower MAC/PHY (optical networks, cellular, microwave, etc) layers shuffle bits around. tl;dr wireless comm is complicated.

21st century technology, 20th century mindset

[Pojut]

It's eerily similar to our patent laws, communication laws, and copyright laws.

UK - setup

[ZERO1ZERO]

What gets me, is they are double creaming you. You Pay for a limited amount of megabytes AND only for a time period! So with 3G dongles for example, you pay say £10 or £20 or £50 for maybe 1GB, 5GB and 'unlimited GB' - but they cap you in that this is for '30 days'. So if you dont use up your allowance in the time period, then you are shortchanged, as you have paid for it. Some people operate it the opposite way - you buy an amount it entitles you to 24 hours, 2 days, 7 days or a month etc so If you want to perhaps check your emails or what not when you are on business for a few days, you have to either pay over the odds each day or buy morethan you need.

Can they not just charge you for WHAT YOU USE, WHEN YOU USE IT. It's fucking retarded.

In terms of PAYG mobiles they dont have these problems

Re:UK - setup

[RotateLeftByte]

Some UK PAYG Tariffs do have time limits on the period that the 'Top-Up' is vaild for, AFAIK, these are not from the main carriers but secondary networks that buy space on the main networks.

Back to Data Tariff's.
'3' has a contract £15.00/month for 15Gb. i use the same Sim in a 3G Dongle and in a 'mifi' unit. No problems with 1Mb 1Mb here.

Re:UK - setup

[Splab]

Local areas may vary, but the company I work for charge you however you want it.

You can buy an allowance for the month, like most places - from $10 (1GB) to $30 (5 GB) - or you can pay $1 per MB.

The thing is - if we where to charge you the actual cost per MB traffic, it would be hugely expensive for you to get anything close to 1 GB (putting up towers and having xDSL in the boondocks is expensive, think avg. price pr. MB in the 20 cent range) - most people wont use more than 50-100MB, therefore we can lower the price for 1GB traffic and have all customers pay part of the tarif, while still giving people the ability to "spike" their usage without fear of huge bills. Yes this might seem unfair, but hey, that is how life works - we split the bill for highways, hospitals etc. even though we don't use it equally.

Re:UK - setup

[Anonymous Coward]

Can they not just charge you for WHAT YOU USE, WHEN YOU USE IT.

They can and they do, if you want. Those are always by far the most expensive plans though, unless you transmit and receive only minuscule amounts of data.

It's fucking retarded.

If you say so. Personally I don't want to be nickel-and-dimed to death, least of all for an artificial and pointless metric like "transfer volume".

Re:UK - setup

[illtud]

No problems with 1Mb 1Mb here.

Top tip! Use != when attempting inequality on ./

Re:UK - setup

[Nick Ives]

You're railing against the basic issue of provisioning. Even on fixed line ISPs you get a certain limit (or "unlimited") for a certain time.

Selling someone an allocation without a time limit is a nightmare. What if you end up with large amount of unused data allocation? Potentially it could all be used at once, leading to service disruption for regular users. Also, pure PAYG data usage is a bit of a problem. You don't want people turning up and using large amounts of data out of the blue which is reflected in the relatively high charges for PAYG data compared to on a contract.

Re:UK - setup

[Anonymous Coward]

3's pay as you go setup in the UK is close to the GP's problem, though.

£10 -> 1Gb, must be used in 30 days.
£15 -> 3Gb, must be used in 30 days.
£25 -> 7GB, must be used in 30 days.

There's also a 'true' pay as yo go option, but the prices on it are obscene. Basically, if you're on 3 PAYG and don't grab one of those packages you're paying £1 a megabyte, or something equally stupid.

Re:UK - setup

[Anonymous Coward]

Lived in Ukraine for several years.

Mobile phones were much cheaper:

1. Adding minutes/data - no problem. You can top up your phone anywhere, and minutes and data don't expire for a year.

2. Good selection of packages. In the states, AT&T and tmobile force you to buy more than you want and pocket the difference. The 1c per kilobyte for at&t gophones is ridiculous. In Kyiv, when you go over your limit, it is about 4cents per MEGABTYE (over 250 times cheaper)

http://www.kyivstar.ua/en/personal/prepaid/services/packages/ (in english)

6 dollars can get you 600 MB of 3G access, with only 2c a megabyte for overage.

And all this from a country that doesn't have snow removal yet.

Re:UK - setup

[DMUTPeregrine]

All the US pre-paid phone carriers have time limits on the use. If you add more money before the time expires you get to keep the old money, otherwise your account gets closed and you have to re-activate the phone. (True for Tracfone, Net10, AT&T Gophone, Boost, Virgin, and T-mobile pre-paid that I've seen.)

Re:UK - setup

[wintersdark]

Our (Canadian) Pay As You Go mobile phones have that problem. Seriously. Our "minutes" are only good for a month, so if you buy, say, a $30 phone card, you get $30 worth of minutes which expire in 30 days whether you use them or not.

Some carriers were even selling ones that only last 2 weeks.

It's a load of horseshit. I'm fine with metered billing, absolutely fine. So long as I'm billed for exactly what I use, at a reasonable rate. I'd actually prefer that, to be honest - this "monthly cap" thing is stupid.

Mind you, it's just another straw on the back, really. Add to it the fees for "features" that often have nothing to do with the network at all, such as tethering, or things that have been disabled on your device/account for no other reason than to charge you to re-enable them. Or the *mandatory* voice plans to go with your data plan on smartphones.

Seriously, I'd break my contract, pay out the hundreds of dollars required to do so, and never look back if a new cell provider offered me just a simple, no-bullshit billed-by-use, say, $5/gb. No voice plan at all. No "features". Just a wireless data connection for my handheld portable computer(smartphone).

Re:UK - setup

[jc42]

And, of course, there's the additional problem that there is generally no way for a customer to know how much data they're using, other than to wait for the bill. And this isn't very helpful, because there's no way that the typical customer can relate what's on their bill to what they were doing. Basically, the phone companies can make up any number they like for our data usage, and we have no way of ever disputing the numbers. The software (which is mostly controlled by the company) decides for itself how much data to send/receive, the phone company adds this up however they like, and the customer pays for it.

It's not surprising that customers might not be good at understanding such pricing.

Re:UK - setup

[wwphx]

Reminds me of processing your own color photographs. The chemistry oxidizes quickly, and has a fixed number of prints that it can process, so if you don't max out the number of prints before the chemistry expires, you're wasting money.

That's an easy one

[Minwee]

So why does the price of a 3G megabyte vary based on the device used to send or receive it?

Because you keep paying it. Next question?

Re:That's an easy one

[tlhIngan]

So why does the price of a 3G megabyte vary based on the device used to send or receive it?

Because you keep paying it. Next question?

Close, but the real reason is you're paying for varying levels of access. Think of it this way - you could buy a raw Internet connection at some high price. Or you can buy cut down versions at cheaper prices.

Let's take some simple plan categories - dumbphone, blackberry, smartphone, laptop, VPN. Does ao dumbphone which offers facebook, basic email, twitter and the like need full internet access? Probably not, and the "data" plan you get is pretty limited - it's proxied all the way - after all, the facebook app just connects to the carrier's proxy to facebook, email to their email gateway, etc. All on their private network and probably no way to get on the 'net. If you have a web browser, it'll use a proxy that gets downscaled images.

A blackberry is similar, except it funnels the data through to BES or RIM's servers and heads onto the 'net from there. Again, proxied, but there's access to the 'net. Probably some downscaling of images occur there as well. It certainly does look like a full connection, but it really isn't.

A smartphone plan is nearly full access - probably firewalled and NAT'ed, and maybe some transparent caching procies as well.

Laptop plans (USB sticks), depending on the carrier, may be the same as a VPN plan, in that they get you onto the raw internet - with a fully accessible IP, no firewalling, etc. The cheapskate carriers may just NAT you, and sell a VPN plan with a real live IP.

Carriers can control it all - it's how the B&N Nook, despite having 3G, only gets you to the B&N servers - the 3G is locked down to B&N only. Any other requests are simply blocked by the carrier.

Re:That's an easy one

[thegarbz]

Sub question: What can we do about it?

If you're going to say vote with your wallet, then I ask to which provider? Not having internet is no option. Which provider in that list will offer me 3G internet and 3G mobile at the same rate?

Not exactly

[grasshoppa]

A megabyte is not equal to a megabyte, necessarily.

For instance, let's say I have a credit card processing server going across the same WAN link as web traffic ( for other workstations ). Obviously the web traffic is lower priority than the payment traffic.

As it applies to cell phones; maybe iphone users use their devices differently from other devices? Who knows, it's more likely cell phone companies bilking their customers ( as always ), but my point is that not all MBs are the same.

Re:Not exactly

[h4rr4r]

So sell X GiB at Y QOS level. No per month, since that is just a scam. Either they get you with overages or you don't use it all and it expires.

Re:Not exactly

[thegarbz]

Your QoS example falls down on the face that the device which requires the highest QoS (mobile phone) also has the cheapest rate.

This isn't hard.

[Anonymous Coward]

Why is a roll of toilet paper cheaper when I buy it in a pack of 12 than in a 4-pack? Why does Verizon charge me the same monthly rate whether I'm under contract or not? Because the price of items incorporates more information than relative production costs.

Correction, iPad 3G has commitment free pricing

[SuperKendall]

In the article it states:

"Note that Sprint is the only carrier to offer tablet 3G service without requiring an ongoing commitment; you can start and stop whenever you want -- perfect for the occasional traveler."

But that is true of the iPad plan as well - you can start or stop whenever you like. The Samsung tablet does have that issue with Verizon, which has a fee for stopping service.

The networks want to maximise their profits

[Anonymous Coward]

"Why is an iPad megabyte cheaper than a MiFi one? After all, a megabyte is a megabyte as far as the network is concerned"

http://en.wikipedia.org/wiki/Price_discrimination#Explanation

Re:The networks want to maximise their profits

[SuricouRaven]

I'm surprised the iPad plan isn't more expensive - anyone who can afford an iPad obviously has money to spare, while those on tighter budgets waited for cheaper tablets to become available.

Re:The networks want to maximise their profits

[Sancho]

The iPad (with 3G) is pretty expensive. $630 minimum (but no contract on the data.) The Tab is only slightly less without a contract, but is sold subsidized for, what, about $400? Of course, forcing the data plan on you (and they are expensive) means that it's probably quite a bit more expensive in the long run.

Frankly, I think that Apple saw a new market that they could outright create, and they jumped at it. They own the tablet market right now because they did it first, they did it well, and they started with something familiar. Other companies had tried tablets before, but they didn't get all three of those right.

As for price, lots of people complained about the iPad pricing at first. There were claims that Apple had priced themselves way too high and that no significant number of iPads would be sold. Of course, those were vastly incorrect predictions, and what we're seeing now is that no one else can compete at the same price. They all have to take shortcuts somewhere.

That said, I'd argue that anyone who can buy a tablet has money to spare. They're still all toys right now. The only two that offer any reasonable performance are the Tab and the iPad, and they're still both pretty much consume-only devices. Yeah, John Gruber likes to point out that people are creating with the tablets--and that's certainly true--but the way most people create on most computing devices is by typing, and that's still far and away a better experience on a computer.

Re:The networks want to maximise their profits

[gnasher719]

I'm surprised the iPad plan isn't more expensive - anyone who can afford an iPad obviously has money to spare, while those on tighter budgets waited for cheaper tablets to become available.

On the contrary; anyone who can afford an iPad probably has a well-paying job that they didn't get for being stupid. Or is really looking after his or her money and not wasting it on useless stuff, which is why they can afford an iPad. That kind of person doesn't waste their money on an overly expensive contract. You seem to be in that lower middle part of the IQ distribution where you think you have to be stupid to buy a product that is easy to use. Other people realise that buying a product that is easy to use is actually clever.

Because it subsidizes the phone cost

[MobyDisk]

Part of the data plan's purpose is to subsidize the cost of the phone. That's why they won't let you buy a data-capable phone without the data service. There's no technical reason they can't, they just don't want you to get the discounted phone without paying them back for the discount.

The whole system is stupid. If cell phone providers sold cars, you would get the car for $50, but sign a multi-year agreement to buy gas from them at an inflated price.

Re:Because it subsidizes the phone cost

[bbtom]

"That's why they won't let you buy a data-capable phone without the data service."

http://expansys.com/ does. If you've got loads of money: iPhones/iPads, Android, Palm, Blackberry, Nokia etc.

Oh, wait, you mean in the US where you've got weird old network technologies (CDMA), lack of effective regulation and bizarre pricing (pay to get a text message? Who thought that up?!)

In most EU countries you can buy unlocked phones, and if you've got a phone on a contract, once the contract's minimum term is up, you can call the operator to get it unlocked or you can get your phone unlocked in the many quasi-legal unlocking shops. This is so widespread that loads of networks (all in the UK, for instance) offer SIM-only contracts.

(Personally, I have an unlocked Sony-Ericsson phone I won in a hacking contest. And I use a MiFi for data so I can use my laptop, iPod touch and various other gadgets. Both are pay as you go: 1Gb of data for £10, 3Gb for £15, 7Gb for £25 - lasts for 30 days.)

I post this only because so many "oh my, isn't mobile so fucked up" rants are tied specifically to US-specific things.

Re:Because it subsidizes the phone cost

[tepples]

Part of the data plan's purpose is to subsidize the cost of the phone.

Then why don't carriers itemize the installment payment and the service as two separate line items?

There's no technical reason they can't, they just don't want you to get the discounted phone without paying them back for the discount.

I don't want the discount. I just want the handheld computer, I'm aware it'll cost as much as a laptop computer, and I'm willing to pay up front in exchange for a discount on the service. In Europe, one can buy the unlocked handheld computer, and as I understand it, all carriers offer a discounted SIM-only plan, unlike every US carrier but T-Mobile.

Re:Because it subsidizes the phone cost

[MobyDisk]

Yeah, the US system is completely screwed. But since the entire article was about the US, don't be surprised when the context of the comments is US-centric.

There are providers in the US (T-mobile) who will let you do this, and you can "fool" other providers into doing it by swapping sim cards out of another phone. Which is truly sad. I had a Verizon guy try to dance circles around me dodging the question of why I can't buy a phone with a 5MP camera and a flash without buying a data plan.

Re:Because it subsidizes the phone cost

[MobyDisk]

Then why don't carriers itemize the installment payment and the service as two separate line items?

You mean, in a straightforward manner like every other business on the planet? I wish I knew. I suspect one just can't understand certain things without the evil gene.

If I had the money, I would setup "Honesty wireless" which would just take the existing wireless business model, and make the pricing sane. I think people would be so flabbergasted that it makes sense. "Wait... you mean since texts actually don't cost the network anything, they are free? And... I pay the same price per megabyte regardless of what color my phone is? And... I don't have to pay for things I don't use? Inconceivable!" And the best part would be seeing the balance leftover on your phone loan.

Re:Because it subsidizes the phone cost

[Anonymous Coward]

If cell phone providers sold cars, you would get the car for $50, but sign a multi-year agreement to buy gas from them at an inflated price.

AT LAST a car analogy! Thank you!

Pricing doesn't work like that.

[Jasonv]

They're priced different because pricing isn't based solely on the cost to the supplier. Demand, competition, perceived value, price discrimination, etc... all influence the price as well.

Premist is flawed

[Mr. Freeman]

"Carriers are increasingly charging for 3G mobile access by the megabyte, to prevent 'unfair' subsidies of heavy users by everyone else."

No, they're not charging more in order to make the network "fair" for everyone. They're charging more because they can get away with it because there are no real alternatives for anyone to switch to (especially with the 2-year contracts they're allowed to lock everyone into).
It's just that saying "We're charging more money because we're a company that's driven by making more money" doesn't go over as well as saying "We're charging more money to keep the network fair".

Re:Premist is flawed

[ChefInnocent]

Well, if the customer read their contracts, they could get out of it when the company changed it because it is a significant change. That is to say, if a company decides to change the terms of the contract, I don't have to agree and I'm no longer locked into the 2 year agreement. My friend did that last year with Sprint because they were going to charge $0.70/month (or some other bogus amount). He then sold his (subsidized) Palm Pre on eBay and bought a Droid through a different carrier.

Also Re:Not exactly

[medv4380]

Also A lot of the different pricing comes from recoup costs for subsidizing the smart phone and tablet costs. The just do the math as we need to make up X for each customer who uses a smart phone because we give out Y number of smartphones at Z loss. Z/Number of estimated users = the amount we need to jack up the price. Some items cause them to loose more money then others like the little USB modem may cause them to loose more money and thus creates a different price system. 1 megabyte is the same no matter what but what device you use puts you in a different group of people that cost them money. Comes down to there is no such thing as a free phone. You'll pay in the cost of service if you actually get a free one and cost others who didn't because they don't charge them less for not participating in the annual commitment scam they charge them more to "encourage" them to join the cult of "free"

Peak hour pricing

[Ichijo]

A megabyte at the hour of peak usage is worth much more than a megabyte in the wee hours. So one reason to charge more for megabytes from USB modems is because they are more likely to be used during business hours than iPhones.

It would be better to make the network completely device agnostic and instead have time-of-day per-megabyte pricing tiers, but that would add complexity.

Itsn't it sad when you get more relevant NEWS on

[crovira]

Comedy Central than on your so called newspaper/news show/news/broadcast. Suck to be you America...

Not Verizon Droid

[FredFredrickson]

I don't know how this fits in, but Verizon's driods require the unlimited droid dataplans. You can't buy it without the droid data plan. It's unlimited for aproximately $40/month. no cap. phone only (tethering costs extra unless you use barnacle)

One word

[nurb432]

"Scam" That explains all the "pricing structures" known to man.

"given a level playing field"

[crovira]

You must be kidding if you think that Rupert Murdoch (of Fox) isn't talking to Jef Zucker (of NBC) and Steve McPherson (who's now out so it might be Paul Lee) (of ABC) or Les Moonves (of CBS) and the rest of these media moguls when they get together in their conclaves in Aspen or Teluride or wherever the Hell they get together whenever the Hell they get together.

The phase "given a level playing field" shows a charming naiveté on you part which is astonishing given that you're posting on /.

Re:"given a level playing field"

[Pharmboy]

The phase "given a level playing field" shows a charming naiveté on you part which is astonishing given that you're posting on /.

No, it shows that the problem is the playing field, which has been unleveled by political meddling and payola. We don't need new rules on what companies can charge, which would instead only serve to raise the cost of entry into the market for other players, we need the field to be open and level. *Real* capitalism isn't the problem, it isn't even being practiced. Capitalism *does* work just fine, and it is my high hope that we soon try it in America, perhaps to replace the Corporatism we currently practice.

You obviously know nothing about anything I have written previously on the subject yet quick to misread then judge my intelligence on the matter.

How fast does it go?

[lionchild]

And now with "4G" speeds, you can effectively use up a 5Gb alotment in a month in just over 30 minutes. At least in theory.

Banks funding capitalist ventures?

[crovira]

Whatever you're smoking, it must be illegal.

You can't even get banks to venture a loan backed by assets.

Corporations are sitting on billions in cash which explains what the banks are doing with the money. NOTHING!

They're paying themselves more interest on the money on hand and less interest on the cash reserves than ever before.

We have the idiots at the Fed to blame for that.

Their policy of fractional percentage DECREASES in the cost of borrowing the Fed's money by the major banks means that it doesn't pay for them to lend it out at all.

Managed network were not so bad

[scamper_22]

I remember a while ago, when companies still offered unlimited internet plans... but they were throttling traffic. People made a big fuss about it.
Today, we see unlimited plans for internet and wireless are disappearing, overcharges are common...

The first thing to note of course is that a network (cell-phone or internet...) is not something to be characterized in such a simple manner as cost per MB. There is no cost per MB.
Costs for a network are basically the following

1. Infrastructure costs (routers, equipment, towers, license fees)... this is a fixed cost no matter how much traffic goes through.
2. peering costs. Most people are ignorant of this one... but the target location of your data actually matters. If your ISP is a small one, chances are they don't have a peering agreement with say ATT. So if the target location of your data is on the ATT network, your ISP might have to pay ATT transit charges.

Those are the only real 'costs' as it relates to the data itself.

Now how much traffic you can pipe through the system is a challenge... especially when it becomes congested. Just like almost any other network, it is not built for 100% of its users to be using 100% of their capacity 100% of the time. So you do face challenges 'managing' people's usage.

There are basically 2 ways to handle this. Note, these are totally arbitrary and need to be though of as separate from the real costs costs above.

1. Impose some artificial price to make users contain their usage. That is your per GB/MB charge. As this charge is not based on some true cost... it really is not a surprise that they impose different costs on different devices and plans... it is really just a deterrent to make you use less traffic.

2. Have the ISP 'manage' your usage. This is best known as throttling where companies would throttle the traffic of users. Maybe they slow down peer to peer traffic, or video traffic...

I am much more in favor of having ISPs manage their network rather than charging users directly. managing their network can actually produces a result people like. The ISP with the best management of its network for its users will win over more users. Users on poorly managed networks will complain that their video is slow or the p2p keeps dropping... They will switch to better managed networks.

There are of course problems with throttling... an ISP offerings its own phone service might start throttling VOIP service from competitors... Those are valid concerns of course. But that is nothing new. ISPs and wireless companies are monopolies to an extent and SHOULD always be investigated. Google is just being investigated by the EU for possible downgrading the links of its competitors.

My ideal throttling scheme goes like this.
You get unlimited usage. When congestion occurs, the ISP starts slowing down users based on their usage/plan. Want to be slowed down less... you purchase a more expensive 'GOLD' plan.

Now wireless is a bit different in that you actually need some kind of feedback between the cell phone provider and the cell phone. You can't just drop packets are the cell-phone provider level... the user will have already used the precious Over-the-air traffic before it is dropped. So for cell-phones they should have something where by the cell phone company can tell your phone to slow down its traffic. I don't know if this already exists BTW... I'm from the networking world, not the cell-phone world.

since both wireless and internet are somewhat monopolies... I really think the government should have a say in managing them. And quite frankly, forcing them to manage their own networks and stop these charges would be a welcome change.
It is not like a having a phone where you have to actively initiate a call... or actively make a long distance call. You know you are being charged and its a focussed activity. People really don't have the kind of immediate feedback as it relates to managing their internet / cell phone data use.T

Re:Itsn't it sad when you get more relevant NEWS o

[mujadaddy]

You're assuming two things:

1. That (300 million Americans) want or need information in their news, and

2. We can't afford to just wait for our international brethren to inform us we talk like fags and our shit is all retarded.

So what's your point?...

[crovira]

It might be illegal if you can prove it, but I'm sure that the heads of the corporations don't scribble it down or send it through email.

The amount of corporate espionage which occurs in any country is only partly funded by a desire to get the goods on the competition.

The rest is funded by a desire to maintain a profitable equality in pricing.

Re:So what's your point?...

[meloneg]

Actually, it may not even be that involved. It is pretty trivial for competitors to watch each others prices and stay close. In fact, it is the exact same mechanism that allows price-wars to work. In this case though, no one sees a need to try to sweep up the entire market. They've really got no incentive to. None of the major carriers could absorb the customers of one of their peers without crippling their own network.

It's about expected use and willingness to pay

[proxima]

The assumption, as best I can tell, is the same that drives carriers to charge $20/mo tethering fees for using smartphone data plans with a laptop. Basically, they don't expect you to use very much of your monthly plan.

The ipad+mifi deal from Verizon is another good example. If you want just a mifi (for, say, a laptop or an existing ipad), you pay $260 + $40/mo (contract) for 250MB or $60/mo for 5GB. If you buy it with an ipad, you pay only $130 for the mifi device and get the option to buy month-to-month $20 for 1GB, $30 for 3 GB or $50 for 5 GB. With the right usage pattern it wouldn't take long for the ipad to pay for itself.

Frankly, dedicated computer links (via USB or wireless) tend to have pretty lousy rates. Why? Because the carriers know these tend to be business customers (who have their companies pay for it) and they also tend to use more of their service than many smartphone users.

That said, provided they have the coverage you want, there are good alternatives to the standard ATT/Verizon choices. Virgin Mobile sells a mifi for $200 from Walmart with a $20/mo prepaid 1GB plan (if you buy direct from VM, it's cheaper but you only have the choice between $10/100MB or $40/unlimited). It uses Sprint's network (actually, Sprint bought Virgin Mobile USA last year).

This is funny. GP didn't read/understand OP, and

[Asm-Coder]

parent didn't read/understand GP.

Wireless tethering for the WIN

[RapmasterT]

I have "unlimited" data service on my android phone, so after a damn simple rooting I now have wifi tethering for devices to the phones 4G network. This let me get rid of my clear.com service for my laptop ($45 a month), and avoid buying another data service for my ipad.

It may be a breach of service contract, but I'll be goddamned if I'm going to buy 4 completely different internet data services, when one is all I need at any given time (except I really do need two as the one at home has to be up all the time).

3G per?

[Metrathon]

How much is a G again? Or rather, 3G?

Re:3G per?

[neminem]

About 29.4 m/s^2?

Re:This is funny. GP didn't read/understand OP, an

[Nadaka]

silly question? Why have you marked me as a foe?

Let's not forget text messages

[thestallion]

Probably the worst example of these sort of ridiculously unfair pricing schemes is text messaging. Remember when text messages first came out in the US, and they were only 5 cents per msg? Over the five years or so following that, their price inched all the way up to where it is now, 25 cents per msg I think (or is it 20?). Either way a 400%+ increase in price, despite the fact that most networks can handle more traffic now than they could back then.

The obvious cause for this is lack of competition. There's simply no incentive for the few companies holding down the monopoly on cell services to charge any less for text messaging.

It's frustrating that our govt either can't or won't do anything to open up the market to more competition.

Re:Let's not forget text messages

[damn_registrars]

It's frustrating that our govt either can't or won't do anything to open up the market to more competition.

The cell companies have convinced a significant portion of the customers that they need a plan with unlimited text messages just to exist in this world. Hence they make those of us who don't have it appear to be a minority of customers who don't need anything else.

And IIRC T-Mobile is now charging me $.30 per message, each way. I just don't send any, unless I really really need to (which is almost never). In fact I would just turn the service off altogether, except a while ago I actually found a valid use for it, and I want to have it available just in case another similar situation should arise.

But either way I wouldn't hold my breath waiting for government intervention on the matter.

Re:Let's not forget text messages

[thestallion]

They've more than just "convinced" me that I need a plan that includes text messages. "Forced" is more like it. I'm 31 years old and the majority of my friends, around my age, rely on text messages extensively to coordinate all sorts of social events. I've been told that it costs $5.00 a month just to block the ability to receive those messages! Not to mention that half my friends would be too lazy to call me instead of texting, because they aren't used to having to do that for anyone else. So I pay $5.00 extra per month for 200 texts, and I have to be really careful to not go over that limit, which basically means I have to tell certain friends to "just stop texting me".

It's really rotten that the US is one of the only places where they charge you to RECEIVE texts!

Re:Let's not forget text messages

[damn_registrars]

It's really rotten that the US is one of the only places where they charge you to RECEIVE texts!

Indeed it does blow that we are charged for the privilege of receiving a text message. Generally if someone sends me one I respond by calling them on the phone; they generally get the idea after a couple times.

That and I find that few people who communicate largely by text message are worth communicating with often anyways, they seem to be at a different point in their lives than I am - a point that I don't care to return to in my own life.

capitalism

[falconwolf]

What happens when all the carriers get together and say "I think a Megabyte is worth a dollar more?"

Where there are no monopolies or restrictions on competition and new players see an opportunity they will enter the market with lower prices.

Falcon

Re:capitalism

[suutar]

Right. Now we just have to actually reach "no monopolies" and "no restrictions on competition", because the cost of building an initial set of cell towers is most certainly restricting new players from entering the market.

Re:capitalism

[falconwolf]

Right. Now we just have to actually reach "no monopolies" and "no restrictions on competition", because the cost of building an initial set of cell towers is most certainly restricting new players from entering the market.

Making transceivers doesn't cost much actually, the costly part is locating towers. However with higher powered transceivers fewer towers are needed. Regulations though set maximum power levels. Another way to reduce the number of towers and transceivers needed is using shortwave broadcasting. I used to get a kick out of listening to Radio Moscow on shortwave, before the collapse of the Soviet Union. And I lived in Florida then. When disasters happen knocking out land-line communications, shortwave radios are used. Still today Radio Shack sells shortwave receivers, of course I'd rather go to Skycraft to buy the parts then build one myself.

Another way cellphone service is and was restricted is by the use of System Identification Numbers, or SIDs. Licensing is required.

Falcon

But can I choose a country?

[tepples]

I post this only because so many "oh my, isn't mobile so fucked up" rants are tied specifically to US-specific things.

How much does it cost to emigrate, and which country do you recommend?

Fiscal incentive...

[keith_nt4]

Here's the way the data plans should work, not that verizon/att would listen to me:

Tell everyone who wants a smart phone they MUST get the $30 unlimited data plan. Then tell the customer they get a "discount" for specific increments under a particular amount of data. Like say for if the customer uses between 1 and 2 GB per month they get "$10 off" the bill, between 500Megs and 1 GB "$15 off" and if they use less then 500Megs then "$20 off". So the customer thinks they're saving money by using less data and the carrier's networks are that much less saturated. Essentially you would be giving smart phone users a financial incentive to switch to wifi for things like downloading games and listening to Pandora.

This idea just came out of my frustration of using less than 500Megs a month yet being charged the same $30/month as if I used 5GB+. I would like to be charged less for my minimal amount of data usage. But I guess that's just me.

T-Mobile pricing

[Fencepost]

The article lists T-Mobile as having an "unlimited" plan for $30, but in reality it's more like "If you go above 5GB, we'll cap your bandwidth down to EDGE speeds until the end of the month." They also just recently added a tethering plan for I believe an extra $15 or so a month, which would put that 5GB+ at around $45 ($35-40 if you have a loyalty plan) with tethering. Of course, people have figured out other ways to tether on at least some of their devices....

Who pays for WiFi at a hotel?

[damn_registrars]

Page two of the article ends with

It also has a $10-for-100MB no-commitment option for a one-day trip -- it's cheaper than paying for hotel and airport Wi-Fi.

While of course very few airports (and almost none of any importance) have free WiFi, most hotels do. In fact, I often use it as a selection criteria when choosing which hotel to stay at. I can't recall off the top of my head the last time that I stayed at a hotel that did not have free WiFi (although I have stayed at a few that had rather lousy free WiFi).

Too complex for Slashdot geeks

[gnasher719]

What the geeks here don't understand: When you buy "up to 3 GB per month", as an example, you do not pay for 3 GB. You pay for the average usage of all users of that plan. If owners of device A on a 3 GB plan use 2 GB on average, and owners of device B use 1 GB on average, then the same "up to 3 GB" can be sold a lot cheaper to owners of device B.

Why? Coverage

[192939495969798999]

3g is wireless, and wireless varies on cost depending on coverage. A 5mb connection with nearly seamless nationwide coverage can't cost the same to maintain as a 5mb connection that has spotty intermittent coverage, and that cost has to be passed on. What you suggest is that a speed limited rolls royce should cost the same as a same-speed limited honda civic.

corporate

[Anonymous Coward]

If AT&T or Verizon catches you using your smartphone to connect to corporate email

Besides the obvious that I use the link for what I want to use it for the only way they would "catch" you using corporate email is if they monitor the connection, wouldn't that be the same as wiretapping and be illegal.

government interference in the markets

[falconwolf]

Which government interference would you say is the problem?

The granting of monopolies for one.

What should the government stop doing to improve the market?

Stop granting monopolies! Get rid of monopolies altogether. Get rid of licensing too.

Falcon

Re:government interference in the markets

[sjames]

What monopoly? Are you saying there is only one cellular provider in the U.S.?

Re:government interference in the markets

[falconwolf]

What monopoly?

What monopolies? How about those monopolies granted to cable, phone, and power companies that grant exclusive use of easements or rights-of-way.

Are you saying there is only one cellular provider in the U.S.?

No I didn't, nor am I saying it now, there is only 1 cell service provider in the US. Are you really so stupid to believe I said anything like that? Or is it FUD you're tries to spread?

Falcon

Re:government interference in the markets

[sjames]

I asked what was making the U.S. cellular market fail and you claimed a government granted monopoly was the cause.

So, either you have no idea what a monopoly is or you are, in fact, claiming that there is only one cell provider.

Meanwhile, power companies have nothing to do with the discussion at hand.

Re:government interference in the markets

[falconwolf]

I asked what was making the U.S. cellular market fail and you claimed a government granted monopoly was the cause.

So, either you have no idea what a monopoly is or you are, in fact, claiming that there is only one cell provider.

It's you who has no idea what a monopoly is. Let's correct that now.

1. something that only one person or group of people has
2. What Does Monopoly Mean?
   A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products.
3. Legal Dictionary
   1 : exclusive control of a particular market that is marked by the power to control prices and exclude competition and that esp. is developed willfully rather than as the result of superior products or skill —see also ANTITRUST Sherman Antitrust Act in the IMPORTANT LAWS section
4. Monopoly
   Market situation where one producer (or a group of producers acting in concert) controls supply of a good or service, and where the entry of new producers is prevented or highly restricted.

A monopoly does not necessarily mean only one entity controlling a market. For instance though MS Windows and MS Office both have dominate but not exclusive monopolies of Operating Systems and Office suites, MS is a monopoly. Let's also make it clear, being a monopoly is not necessarily bad or illegal, how the monopoly is used determines that. For instance MS forcing OEM computer manufacturers not to sell PCs with operating systems other than MS OSes such as BeOS and Linux, and not allowing them to install Netscape as the browser or WordPerfect or other office suites instead of MS Office is what was illegal.

Meanwhile, power companies have nothing to do with the discussion at hand.

You asked about monopolies and power companies are monopolies.

I'm thinking you're trolling so I'm not going to reply again.

Falcon

Re:government interference in the markets

[sjames]

Of course you think I'm trolling, I've dared suggest cooking your sacred cow.

Just how is it you believe government is granting a monopoly on cellular service? Is it by failing to mandate interoperability? Perhaps by allowing the towers to be privately owned? I know, by mandating 2 year contracts and incompatible handsets (oh, wait, that's not mandated, but the free market champions won't let us ban the practice).

Government has granted a monopoly on the local loop for wired service, but not for wireless.

Meanwhile, all of your definitions suggest a single entity (person or group of people acting as one) controlling the market. OTOH, if you allege that the several entities that more or less evenly divide the market share are voluntarily colluding (that is, that they are an oligopoly), then you should be calling for MORE government interference to break them up.

You asked about monopolies and power companies are monopolies.

I also asked about communication, but that doesn't make an essay about the training regimen of an ancient Roman messenger relevant.

coverage

[falconwolf]

I also need something that has coverage through at least the five states I usually travel through; no insane roaming rates for leaving those five states; and consistent, quality service.

Actually In think that's pretty easy to handle, it's done now and has been done since land-line phones were installed. I am company A in your state and I make an agreement with cellphone service providers in the states that surround me so that when you are in their coverage area they relay your calls. Now I may cover their costs, or I can charge you a roaming charge then pass it along to them. If the traffic is pretty much equal, I would relay calls for their customers as much as they relay my customers' calls then we could say one cancels the other, much like Interconnect or peering agreements work on the net.

I can't see a startup offering that any time soon

The higher the demand the faster it would happen. Just 15 years ago how many people would have believed we'd have always connected faster than 56k baud internet connections today? I stopped paying for by the minute connections more than 10n years ago.

unfortunately, we don't have a free market... nor is there any chance of fewer regulations coming along...

Unfortunately I agree with you, there is no free market and the odds of there being one in the next decade are less than slim, and none. Actually I aspect more regulations not less, which as long as they are about net neutrality it's okay. But if they make monopolies more powerful then it is not okay.

Falcon