Unlimited Data

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Colin here, and I am seeing an increasing trend towards cellular data plans offering unlimited data.

T-Mobile offers unlimited slow-speed data for free, and unlimited high-speed (4G) data for a flat $20 a month per phone. Sprint (and their Virgin Mobile subsidiary) does as well. But I am seeing similar trends across the globe. A number of countries, like Thailand, now offer similar plans where you get unlimited data and can buy up to unlimited high-speed data. ($24 in Thailand will get you 4 GB of high speed data and unlimited data at 256 kilobits/second). The carrier “3” in the UK offers “all you can eat” high speed data and even offers a Tethering option.

I hear AT&T and Verizon bemoan the abusers of unlimited data. They give startling facts such as 3% of their unlimited data customers consuming 10% or more of their entire network. This sounds really horrible, and you can just envision those greedy data pigs forcing all of the rest of us to pay up for their network hogging.

But wait! Not so fast there partner…

You never hear AT&T and Sprint talk about the 3% or even 10% of their customer base that minimally uses their phones. My father and mother fork over $60 a month and if they use the phone 30 minutes and use 100 MB of data it’s a big month for them. Verizon and AT&T aren’t moaning about these customers.

The fact is that usage ends up being a bell curve. There are the heavy users and there are the light users. Most importantly, there is an average. It’s only the average of all users that matters. If the prices are set properly for average use, then there is no justification for begrudging the heaviest or lightest users.

The truth is that cellular data is dirt cheap to provide. It’s about as close to “free” in cost as anything can be. All of this discussion about building out the back end of the networks is equally nonsense. AT&T or Verizon could simply go to Comcast and buy 300 megabits cable internet connections for a tower and pay about $200 a month. This is not rocket science, despite what you are hearing from the carriers.

In 2007 I remember having a detailed discussion with a Verizon executive about the coming flat-rate cellular bill. He adamantly told me that “it would never happen.” Back then, people paid about $120 a month for a cell phone. I suggested that it could be done for $99 a month and I swear he choked when I said that. Well, here we are in 2014 and flat-rate voice, text, and data is available for $50 to $70 a month. And, the price is still dropping!

So I say bring it on. I look forward to the increasing trend of flat-rate, all-you-can-eat cellular for reasonable prices. It’s good for consumers and good for America.

Of course, you can expect this to be fought tooth and nail. Just look at the recent fight against Net Neutrality, vigorously supported by AT&T and Verizon. Both companies know that they will need to offer flat-rate unlimited data to consumers eventually. So they want to switch the pricing model to where they charge the other end…Google and Netflix and anybody else that becomes popular. I can see the day when Amazon agrees to pay AT&T a premium and suddenly all of Amazon’s few competitors fold simply because they cannot pay AT&T’s premium price. (Don’t think the premium pricing will simply be gigabyte based, it is quite likely to have highly anti-competitive components such as a $100,000 monthly subscription charge that most retailers can never pay).

The bottom line is that flat-rate data is coming, it is the right answer, and for it to not backfire we need Net Neutrality. Leave it to AT&T and Verizon to already be playing the next round of flat-rate pricing before we even get there.

Colin Berkshire