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Mandatory Smartphone Data Plans Seem Hypocritical
If paying for what you use 'is only fair,' why $30 mandatory data plans?
by Karl Bode 06:29PM Wednesday Oct 21 2009
Sure, heavy wireless broadband users might call it pure madness, but there are some smartphone users out there who like to ditch the 3G data plan and simply use free Wi-Fi when it's available. To stop this utter insanity (well ok, to further bloat already plump revenues), Sprint, T-Mobile, Verizon Wireless and AT&T have decided to make $30 data plans for smart phones mandatory. AT&T only recently joined this party. The Consumerist noting how AT&T's deadline for ditching your 3G plan has been extended to October 31, but you'll need the following:
quote:
• You must have added data service before September 6th. Obvious.
• After making the change, you must have all data service shut off for your smartphone.
• No more a la carte options, kids. If you want pay-per-use data on a smartphone, you need to build a time machine and travel back to September 6th.
• iPhones aren't eligible.
Again, granted: most smartphone users prefer having uniform 3G access wherever they travel. But some wacky users simply wanted to save at least $30 a month. Taking that option away from consumers must be the kind of wireless industry pro-consumer awesomeness executives speak of so frequently. Here we have customers not only being forced to sign up for a 3G plan, but they're not even being allowed to only pay for what they use.

It's important that you notice something here. AT&T, like all mega-carriers, proclaims to love per-byte billing -- and consistently talks about how charging consumers only for the bandwidth they use is the fair thing to do. Yet here you have AT&T preventing light data users from actually paying a reasonable price for what they use (namely, little to no bandwidth). That's because the industry's version of metered billing has nothing to do with fairness.

In a pure and fair per-byte billing model, you'd have the heaviest users paying more for bandwidth, and the lightest users frequently paying virtually nothing. The problem? Light users make up the vast majority of most ISP's consumers, making it an unattractive business model for companies used to making billions from services like SMS that cost virtually nothing to provide. AT&T would still probably be profitable under a pure per byte model with reasonable per GB overages. Just not profitable enough for the company's investors.

In reality, the industry's ideal version of per-byte "fairness" involves charging millions of users for more than their fair share, and socking heavy users with steep overages. Carriers get to have their cake and eat it too, essentially pushing for prices that are higher than under the existing flat rate pricing model, while doing it under the pretense of "fairness." Keep mandatory $30 smartphone data plans in mind the next time you hear an incumbent ISP executive proudly proclaim that paying for what you use "is only fair."


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