Monday, September 13, 2010

Cracks In The Metered Wireless Broadband Plan

Every smart telecom analyst will tell you that the days of unlimited wireless broadband are coming to an end.  I must be stupid because I'm can't agree with that.  In fact, I think the players who are pushing hardest on this in the US may be the most out-of-step: AT&T and Verizon.

Consumers don't understand what a megabyte is.  Even in the industry, as a savvy user, many people don't really know what drives their consumption up or down.  Yes, movies and music do it, but a single web page can range from 100kb to 1mb, depending on what's on it.  Consumers don't understand electricity either, however.  That doesn't mean it's not metered.

The real constraints on metered wireless broadband are technology and competition.  Technology is dropping the cost of transmitting data by more than 50% with each subsequent generation.  Wireless carriers are also making their networks denser and improving back-haul, which is adding capacity for wireless data.  This means that even as carriers try to impose constraints, the cost of delivering that data is dropping significantly.

Interestingly, the cost of a mobile broadband monthly card - around $60 from the major carriers - hasn't changed in years despite the transition from 2G to 3G and now the approach of 4G.  Business users have proven remarkably price insensitive as demand has surged.

The other constraint is competition.  You can't change your electric company, but you can change your wireless carrier very easily.  And the rise of prepaid wireless and the plunging cost of electronics is making easier for consumers to switch around.  Virgin in the US just started offering a prepaid MiFi for $150, no contract, and monthly unlimited usage of $40 - no strings or constraints.  And while Verizon caps data card usage at 5GB, their new smartphone plans have no such cap, unlike AT&T.

$60 A Month - 5GB Cap
$40 A Month - No Cap

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