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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."

34 of 205 comments (clear)

  1. Fascinating by Ltap · · Score: 4, Insightful

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

    --
    Yet Another Tech Blog
    (but so much more, including game and movie reviews)
    http://yanteb.peasantoid.org
    1. Re:Fascinating by Monkeedude1212 · · Score: 5, Funny

      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!

    2. Re:Fascinating by timeOday · · Score: 4, Informative
      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.

    3. Re:Fascinating by epine · · Score: 2

      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.

    4. Re:Fascinating by SimonInOz · · Score: 2

      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!

      --
      "Cats like plain crisps"
    5. Re:Fascinating by chrish · · Score: 2

      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.

      --
      - chrish
  2. the interesting page is that one : by godrik · · Score: 5, Informative

    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

  3. Not all megabytes cost the same by Anonymous Coward · · Score: 2, Informative

    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.

    1. Re:Not all megabytes cost the same by MrQuacker · · Score: 2

      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.

  4. UK - setup by ZERO1ZERO · · Score: 4, Insightful
    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

    1. Re:UK - setup by RotateLeftByte · · Score: 3, Informative

      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.

      --
      I'd rather be riding my '63 Triumph T120.
    2. Re:UK - setup by Splab · · Score: 2

      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.

  5. That's an easy one by Minwee · · Score: 4, Informative

    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?

    1. Re:That's an easy one by tlhIngan · · Score: 2

      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.

  6. Re:Profit! by Monkeedude1212 · · Score: 5, Insightful

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

  7. Re:Profit! by h4rr4r · · Score: 4, Insightful

    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.

  8. Not exactly by grasshoppa · · Score: 2

    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.

    --
    Mod me down with all of your hatred and your journey towards the dark side will be complete!
  9. Re:Profit! by MBCook · · Score: 2

    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.

    --
    Comment forecast: Bits of genius surrounded by a sea of mediocrity.
  10. Re:Profit! by freedumb2000 · · Score: 2

    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.?

  11. Re:Profit! by h4rr4r · · Score: 4, Informative

    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.

  12. Re:Profit! by Pharmboy · · Score: 2

    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.

    --
    Tequila: It's not just for breakfast anymore!
  13. Re:Profit! by Maxo-Texas · · Score: 2

    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.

    --
    She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
  14. Re:Profit! by MobyDisk · · Score: 2

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

  15. Re:Because by natehoy · · Score: 2

    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

    --
    "This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
  16. Premist is flawed by Mr.+Freeman · · Score: 4, Insightful

    "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".

    --
    -1 disagree is not a modifier for a reason. -1 troll, flaimbait, redundant, overrated are NOT acceptable substitutes.
  17. Re:Profit! by j-beda · · Score: 4, Insightful

    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.

  18. Re:Profit! by puto · · Score: 4, Informative

    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.

    --
    The Revolution Will Not Be Televised
  19. Re:Profit! by h4rr4r · · Score: 2

    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

  20. Re:Profit! by Sancho · · Score: 2

    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.

  21. Re:The networks want to maximise their profits by Sancho · · Score: 2

    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.

  22. Re:Profit! by sjames · · Score: 3, Insightful

    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.

  23. Re:Profit! by tepples · · Score: 2

    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.

  24. Re:The networks want to maximise their profits by gnasher719 · · Score: 2

    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.

  25. Re:Profit! by Lilith's+Heart-shape · · Score: 2

    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.