Bandwidth Charges

[Taem]

As I consider switching phone carriers from Verizon to AT&T for the upcoming IPhone 2.0, I can't help but look at all the fees. AT&T is offering a new Data-Package that charges $20 a month for 2 GB of data, and another $10 for each GB over that initial allotment. But I can't help but wonder, "why?" The phone lines have been paid off long-ago. If the bandwidth charge is simply a future fee to keep servers "up-to-date" with the modern age, then why not a flat-rate? Why charge users more based on how much data they upload or download? Part of the article I read about AT&T changing their rates to a per GB system is their claim that some users "abuse" their systems by constantly downloading and uploading, but if AT&T owns the servers, what's the problem? It puts more stress on the servers? Is that why high GB users will be charged more?

Why do I even care, because I certainly don't use more than 1 GB per month on my phone? Because Google says its possible to give customers internet speeds of 1.5 terabytes per second (they were set to outfit a town with this high speed broadband the last time I checked). With that kind of internet speed, we will be able to watch movies on our phones freely in HD, but at what cost?

If this super high speed internet does become the next thing all consumers use, will we still be charged $10 per 2 GB of bandwidth used? And if not, why not - or better put, why that amount now? Where do they get this number from anyways? Do Verizon and Sprint/AT&T have to pay someone else to use the internet? I'm very confused on how or why they charge for bandwidth now and don't see any future in high speed internet if these rates remain the same. $10 per GB now, $100 per TB later?

Thoughts/answers?

[swirly]

I caught some discussion on http://twit.tv/ the other day about this. One point that seemed interesting to me was that one of the people they had talking said there was data showing that iphone users use a significant amount more data than other smart phone users. Now I have no details on this so I don't know what was being compared or how valid it is. The way they talked though was that for a section of users, they would be able to go to the lower plan. What was it...200M? It seemed insanely low to me since the next level was 2G. Anyway, they were saying that since that plan is something like $15 cheaper per month than the current unlimited plans and still would be plenty for those users...that it could actually be huge savings for them. So there seems to be a portion of consumers who this is good for.

They also weren't entirely against it for iphone users either. They looked at their (the host's) usage and found that they pretty much averaged less than 2G per month currently. These being tech media professionals who pretty much use their devices a ton. One reason they gave for this is that while at work or home their phones use the wireless networks at those places which cuts down the usage over the phone network a ton. This may or may not be the case for more normal users. The 2G plan is cheaper than current unlimited plans though (so they said...I've not verified). So if most people end up not using 2G of data on their phone then it is still a savings actually.

Another thing they discussed was the fear of limits. People just hate having them. Many will pay more to have no limit even when they don't come close to the limit in the first place. So I think there is a big mental negative about these new plans even though in use they may not be so bad.

A big problem area they pointed out was tethering. Apparently AT&T is charging an extra fee for tethering and then if you do tether you figure your usage will skyrocket since you are using multiple devices on the network. So that is where they are going to really be getting people. In my mind it is the reason behind it all even. I think AT&T is fine with the usage of normal iphones, but either fears how much will be used by tethered devices or simply wants to milk such for all the money they can.

The people on the show also mentioned that AT&T claims that the network simply can't support unlimited with tethering and everything. That there would just be too much data from too many iphone users. The hosts went on to say that it is actually a reason to let the iphone go to other networks. They believe the other networks would be in the same situation if they had all the iphone users, but that if you spread the load...let iphones be on any network...then all the networks come out in better shape. Once again, I don't really know much about this stuff...I'm just relaying what I heard on the show hoping maybe it will spur discussion.

The conclusion I came away with from listening to the discussion was that in general, these plans will likely be a discount for 90% of AT&T users that are currently on an unlimited plan. (It should also be mentioned that if you are on an unlimited plan already, you get to keep it until you decide to change to do a different one) I do agree though that the future is in unlimited due to tethering and people just plain not liking to have to worry about going over caps which they do worry about even if they never get close to them.

It should also be mentioned that, in general, I hear a lot of complaints about AT&T from the people on TWIT. So when I hear them saying it might not be too bad actually...basically not being too hard on AT&T...I start wondering if maybe I need to consider the plans more than the initial "OMG! Caps! Nooooooo!" reaction I had (which I very much did have).

[Concillian]

At one point I was planning to subscribe to AT&T U-verse. I was told I could not get U-Verse internet because I had a DSL line from a 3rd party. I would have to cancel my DSL, wait for it to be disconnected, then request U-Verse, which I was told would have at least a 1-2 week wait before a technician could be scheduled to connect new service. Through asking around I found out this was not impossible, and U-Verse internet has no association with the phone line whatsoever, there was no technical relevance. It was simply a company policy to deny such people service, as there was some statistic that demonstrated people with 3rd party DSL lines, on average, required significantly higher provider resources than those customers transferring from a more "mainstream" internet service provider like DSL through the phone company, cable internet, etc... I also found out there was not actually a 1-2 week wait on technicians, and that I was told this to further dissuade me from purchasing their service.

It wasn't that they couldn't provide service to people like me, it was that they didn't want to. This is the same company and I'm betting the same case. If someone is concerned enough with the limit, they'll go somewhere else and be someone else's problem, and this is exactly what AT&T wants. If they want an iPhone bad enough and know they'll use more than 2GB per month, they'll stay and pay for it. This way AT&T's competitors are at a disadvantage in the resources per capita.