Mobile Operators Go Unlimited... Just As ISPs Insist They Need To Charge Per Byte?

from the please-explain... dept

There was a ton of press coverage yesterday over the fact that one-by-one, Verizon Wireless, AT&T and T-Mobile all announced $99 "unlimited" calling plans, ahead of Sprint who had actually been rumored to be gearing up to launch just such a plan. There were a few different storylines that could make this interesting. For example, it's not clear why it's such a huge deal when regional operator MetroPCS has been offering unlimited calling for ages (at a cheaper price). Hell, AT&T Wireless (when it was run by current Sprint CEO Dan Hesse) launched a $99 unlimited calling plan almost exactly a decade ago.

However, what really struck me as interesting is seeing all of these companies rush towards "flat-rate, all-you-can-eat" pricing, just as broadband providers are insisting they need to switch from flat-rate, all-you-can eat pricing to metered pricing, which some pundits are insisting is a better system. So why is it that one group of companies is moving in one direction, while the other is going in exactly the opposite direction? There are a few factors, but the biggest is the competition issue. Mobile operators are doing so because they feel forced to by competitive pressures (which is evidence in those three companies all announcing plans on the same day, in part out of worries that the fourth would beat them to it). As has been pointed out over and over again, the same simply does not exist in the broadband world in the US to the extent that it does in the mobile space. Some might also point out that capacity questions are different for both sets of providers. Mobile phone operators likely have fewer capacity issues to deal with as a result of unlimited calling than broadband providers do with unlimited internet access plans. However, mobile operators certainly are no strangers to capacity issues -- and they mostly dealt with it by (gasp!) investing in infrastructure so they could support unlimited plans.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Sad, Feb 20th, 2008 @ 11:30am

    Please stop reminding me of the crappy "choices" I have for broadband and how Mediacom, etc. are trying to screw us over.

     

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  2.  
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    Iron Chef, Feb 20th, 2008 @ 11:31am

    YMMV

    I imagine a major driving factor was the recent announcement that the analog systems were turned off earlier this month.

    Now that these legacy systems have been turned down, and calls can be routed over more spectrally-efficient digital systems, it only makes sense that the increased capacity is somehow exploited. A move from AMPS to TDMA increased efficency by a factor of 3 or 8 (I think). TDMA to GSM by an increase of up to 150% depending on bitrate and if AMR(G.722.2) employed, hopping/Reuse strategy, etc.

    It seems that that technology was a major contributer to the change in business.

    But I think another major driver is that there are new devices (read: iPhone) that make use of the under-utilized packet-based data services. Maybe we'll start to see other cool services like what DoCoMo customers in Japan have had for years.

    http://www.3gamericas.org/PDFs/Webcast/PeterRysavy.pdf
    http://tech.yahoo.com/blogs/null/8 0140

     

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  3.  
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    Sailingmaster, Feb 20th, 2008 @ 11:49am

    Something else to consider

    One thing not mentioned here that happens in many towns and cities across America is that the cable companies are in collusion. In Indianapolis for example, there are two major cable companies that service the area. For the most part, they do not compete. Their areas of coverage are distinct and by and large do not overlap. You can live less than a block from where the other company has coverage and that company will tell you they "can't" provide service to your address. A friend of mine from college has lived at the same address in Indy for over ten years. There is one house between him and where the other company's coverage begins. He calls them every month wanting to switch. He gets the same answer, No. The Telcos are a cartel. Just like OPEC. And easily as manipulative and crooked.

     

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  4.  
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    Petréa Mitchell, Feb 20th, 2008 @ 11:53am

    Yes, but

    I think the distinction should be made that these are unlimited calling plans-- you still pay extra for other services. (Yes, yes, it's all data in the end, but it's not comparable to unlimited broadband pricing as long as the wireless providers treat different types of data differently.)

     

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  5.  
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    Anonymous Coward, Feb 20th, 2008 @ 12:20pm

    Re: Yes, but

    Actually, Tmobile's offer includes unlimited text messaging also. So Data and Calling is $99
    There are rumors that Sprint is now looking into offering unlimited calling for $60. But that is just speculation

     

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  6.  
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    justin, Feb 20th, 2008 @ 12:21pm

    Re:

    right on!
    no choices these days, its bad, worse, or none!

     

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  7.  
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    Wyatt Ditzler, Feb 20th, 2008 @ 12:28pm

    I would put forth that the wireless businesses do not have one of the cable operators largest expenses. Wireless companies are wireless. They do not have the miles of cable to contend with that cable companies must supply, develop, and maintain. The other is that cable infrastructure is generally inadequate for what it was originally designed. Most cables were designed to carry analog signals, not to be multiplexed with digital HD television, phone service, and Internet service.

    An issue is that the cable operators have neglected to invest in infrastructure recently. Yet, it seems they may be gearing up to invest again.

     

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  8.  
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    Anonymous Coward, Feb 20th, 2008 @ 12:35pm

    Re: Yes, but

    I think Chief is trying to say systems has been upgraded, and they can make enough tasty voice "cake" for everybody.

    It's also nice that Verizon isn't makeing everyone renew their contract to get in the buffet line... Mmmm!

    http://www.techdirt.com/article.php?sid=20080213/133855251#c268

     

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  9.  
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    Karl, Feb 20th, 2008 @ 12:47pm

    Given these plans are aimed at a minority segment -- namely people who chat for more than 2k minutes a month -- I still find it hard to think this is some massive paradigm shift.

    I think most people will still be locked into minute plans, and if you look at Verizon's details from yesterday, the less talked about portion of these plans is that they're packed with data overages....

     

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  10.  
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    Beefcake, Feb 20th, 2008 @ 12:50pm

    Re:

    #7 Yes, except that the telcos received great subsidies courtesy of you and I to build out that cable/fiber network. Now they cry "capacity issues" and hold out their hand again for more subsidies because that's what we've trained them to do. But because we're hesitating this time around, they feel compelled to provide us with incentives (traffic shaping, higher charges for the same service, etc) to keep subsidizing their upgrades.

    Either way, you're gonna pay.

     

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  11.  
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    Woadan, Feb 20th, 2008 @ 1:20pm

    The cellular voice network does not transmit data. So comparing the unlimited cellular voice plans to the landline (either copper, fiber, or coaxial) data plans is nearly comparing apples to oranges.

    Verizon charges $35 for DSL at about 3Mbps down and 768Kbps up. Verizon Wireless charges $59.95 for up to 5GB of data transfer on the wireless data plans, whether it is a modem or a phone that uses the data. And Ev-DO Rev A is near-DSL speeds, but not quite as fast.

    So what is it about cellular data that makes it intrinsically more expensive to transmit then DSL? If you compare FTTP vs. Cellular data, it gets worse, though the price goes up to nearly the same amount for the basic FTTP plan.

    Woadan

     

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  12.  
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    Petréa Mitchell, Feb 20th, 2008 @ 1:33pm

    Re:

    For those of us who missed it, here are the Verizon details that Karl mentioned. Yup, they're getting a lot less generous with miscellaneous data just as they're opening up voice...

     

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  13.  
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    Anonymous Coward, Feb 20th, 2008 @ 2:31pm

    What's funny is that if any provider decided to go for a cheap (30/mo) "unlimited everything". they'd instantly become the most widely used provider over night. but no one wants to take the risk, even if they'd gain complete market control. i know i'd even cancel my plan and eat the cancellation fee if i found a plan like this with someone else. i don't know many people who wouldn't switch.

     

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  14.  
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    Disparishun, Feb 20th, 2008 @ 3:18pm

    This item tries to create a contrast where none exists.

    Unlimited calling involves a single application that is bit-capped to, generously, 50 Kbps or so.

    Unlimited data involves, well, unlimited data.

    Calling them both "all-you-can-eat" plans is sort of like comparing an all-you-can-eat buffet to an all-you-can-spend credit card. Which is a pretty poor comparison.

     

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  15.  
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    RP McMurphy, Feb 20th, 2008 @ 3:27pm

    The postpaid wireless market really isn't going to grow much more, so carriers are competing for the same subscribers... which means that price competition will become an increasing tactic. But I disagree on a couple of points:

    First off, you can't compare the business model of Verizon/Sprint to that off Metro, which offers local calling plans and a premium for roaming - large Carriers have roaming agreements with rates at about $0.04/MoU... a pretty high variable expense.

    Secondly, I think that EVDO Rev A being deployed by Sprint and Verizon will actually serve to increase "capacity" by allowing users to share the same timeslot. This may affect quality of service, but it will clearly stretch the network load capabilites.

    Thirdly, I think that there's too much competition between cable and wireline for subscribers where any one player can afford to shoot their brand's value perception in the foot by deploying pay for play pricing. I also think that all of the internet providers have measures in place to "address" those customers, (say 1%), who abuse the system by consuming a lopsided amount, (say 10%), of network resources.

     

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  16.  
    identicon
    Tack Furlo, Feb 20th, 2008 @ 4:49pm

    I have unlimited faster-than-dialup data!

    Can someone explain this to me...

    Unlimited EDGE data plan added to any voice plan (as low as $19) with a minimum speed of 120kbps and a max of 320kbps if stationary on T-Mobile = $6.99

    Bare minimal cheapass dialup plan with a top speed of 56kbps through NetZero = $9.99

    Max of 350MB in any period of 4 hours via HughesNET which calculates to a top sustained speed of 24k/sec even though I'm supposed to get 1MBit/sec (i.e. 128k/sec) = $109

    Unlimited commercial grade DSL line at 8MB that actually runs at 21MBit/sec because I'm 1 block from the DSL station and they're way, way under capacity = $89

    Charter Cable, which is available at the businesses on both sides of mine, but not here, at only 3MBit, that actually runs around 1.3MBit and goes down a minimum of 4 hours per week = $79

    So, to recap, I can get better than average data service on my cell phone for $6.99, very crappy dialup for $9.99, the worst broadband in existance via satellite for $109, the worst cable within 3 states for $79, or DSL that makes a FiOS user drool for $89, all at the exact same location or within 10 feet of it. Does anyone seriously still believe that the service you get from an ISP and the price you pay for it are even a little bit connected???

    ISPs charge what they think you will pay for what you see on a TV ad. They don't deliver what they claim to (though sometimes that's good, i.e. my DSL) and if they believe you can afford to pay them another $10 then they will charge you that much for it. They're just like credit card companies or mortgage lenders or a blackjack player. In truth, neither wants you to go bankrupt, they just want you to pay them the absolute most you can afford and not go bankrupt or starve to death. Just like blackjack. They want you to get as close to 21 as possible without going over.

    That's the truth. Sad, but true.

     

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  17.  
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    anon, Feb 20th, 2008 @ 5:46pm

    Comcast claims that 5% use 50%

     

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  18.  
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    Kobe Wadsworth Airmaxed, Feb 20th, 2008 @ 7:47pm

    Wimax will take the load off

    With it's spectral efficiency frequency reuse.Wimax is designd for top notch carrier grade voip. I think were seeing telcos squeezing all they can cause they see competition is fixin to get tight Phone company's were designed for voice not broadband.They added that feature to compete.the ip thing is robbing there phone side.The expence of changing there nationwide infrastructure would cost billions.Wimax will cut the cord.with true high speed.How fast do you really want to go.Also current telcos offer nationwide roaming.Wireless voip goes worldwide. My friends im having fun watching the birth of this new disruptive technology,Called Wimax and how it's going to change the way we all live and communicate.
    Kobe Airmaxed

     

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  19.  
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    Scared to be Exposed, Feb 22nd, 2008 @ 5:46am

    Future of media?

    During the whole hd-dvd vs blu-ray "war" many people were quoted stating that they could care less who wins, the future is digital content.

    With a cap like on MB the future is certainly not digital content. If the cable internet companies were NOT tied to cable TV companies with on-demand video there would be no reason at all for them to make such a decision. It is clearly an attack at streaming movies and TV shows since those are both in a position to kill television.

    As a 26-year old who group up with the Internet and watched little TV I hate cable, and lately i'm begging my wife that we drop it and put the money somewhere useful. There are only a few shows I care about, and every one of them is available online after it's aired on TV (legally). Once everything is broadcast in HD the only reason (bad reception) I personally care about cable will be gone.

    Cable companies are going to hurt the evolution of the internet if we don't end up splitting them from their ISP counterparts and/or make it unlawful to make a decision so obviously linked to them.

    Also, especially due to the cost, unlimited voice means nothing to me. My wife and I barely use the 1000min we're essentially forced to pay for. However, since we both have unlimited data on our phones for very cheap (S E R O) we mostly just chat it up through the data connection.

     

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  20.  
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    Jim, Feb 26th, 2008 @ 12:01pm

    It is all About the Data Feed

    Why are we talking about how great the Unlimited Voice Services are when what is really key here is what the Carriers will & can do to handle the massive demands being placed on them for Broadband Data Services. Their voice traffic and costs (spectrum consummed is very well known) and these announcements are really lame. It is what Google has done and what Sprint is doing that matters.
    Sprint with its new WiMAX Network has created this rush towards an Open Network with Unlimited All you can eat Bandwidth, which causes these carriers fits.
    Google has cause major stirings within the Carriers ranks as it pursues the White Space (400Mhz+-) spectrum which will eventually (2009) be released for Unlicensed use delivering Highs Speed Data/VoiceIP and Video delivery and competing with the carriers lame Narrowband Data services.

    Jim

     

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