Why Your Cell-Phone Bill Should Be Going Down But Isn't

http://readwrite.com/2014/05/09/4g-3g-smartphone-data-price-difference

by nkurz • 12 years ago

138 128 12 years ago

pgwhalen• 12 years ago

I'd love to be a cynic, but my family's AT&T bill went down when we got on their new family plan back in February. And now we have way more data than we can use. I can only assume it was due to competition in the market in family plans.

harryh• 12 years ago

My AT&T bill dropped by 25% just a few months ago.

zobzu5• 12 years ago

carriers dont deliver "10mbits" which becomes "15mbits" with LTE.

LTE, GSM, etc. use "radio bandwidth". Thats waves in the air if you will. The faster the wave oscillate, the higher the frequency and the shorter the range at which it will keep oscillating.

Radio bandwidth is a finite element and thus frequency ranges are assigned to operators, to wifi, to your microwave (yes it emits on 2.4ghz and interfere with wifi in fact), to your TV, to handled radios, to your drone remote control, etc.

To give an example, an HSDPA channel is 5mhz. In these 5mhz you may be able to send up to X mbits depending on how the signal is encoded (how the signal is encoded is actually what provides the spectral efficiency).

Recent advances, in particular OFDM allowed us to transmit more data for the same radio bandwidth (aka frequency range). Variants of OFDM are used for xDSL, Wifi (not all standards) and LTE (and many other things, including that HD video feed from sport cars or the ISS).

So, since the milkshake's straw does not and CANNOT change size (again: radio bandwidth - spectrum - frequency range) are we are bound to the laws of physic. We're more efficient in the way we organize the data (and mainly, how we're not losing the data - thats the main advantage of OFDM - if you're interested in how it exactly works, wikipedia)

I really despise articles with sensationalistic headlines, that attempt to carry a point through misleading or even incorrect statements - even if often the result of genuine ignorance.

Also, i'm in the USA and I pay 30/mo for 5GB LTE, unlimited DC-HSDPA, unlimited text, 100m calls. It's not great (calls should be unlimited) but thats a good enough deal. If you're paying more you should consider dropping verizon/att - not blaming milkshakes.

pipeep2• 12 years ago

Although I'm not looking to switch anytime soon, may I ask who your carrier is? I use Republic Wireless right now, who was mentioned in the article, but that's a damn good price for 5GB LTE.

I'm always trying to convince my friends to look into MVNOs over the major brands.

zobzu5• 12 years ago

t-mobile pay as you go - you have to order the SIM online.

there's also decent MVNOs but none offer LTE AFAIK. (well, maybe some do nowadays, but im not aware of them)

source: http://prepaid-phones.t-mobile.com/prepaid-plans

scroll down to "more plan options"

Also thats what ive been using for a while, i think its been there since a year or so.

ams61104• 12 years ago

My Verizon contract is up and I am really thinking about moving to Republic Wireless. The Moto G offers as much if not more than I want in a phone (I have a simple flip feature phone now) and I like that it uses wifi for voice which would make it feasible for me to use my phone at home (I live on the very fringe of cell coverage, and voice calls tend to have a lot of dropouts). Are there any other services I should consider?

im3w1l2• 12 years ago

So, since the milkshake's straw does not and CANNOT change size

The reason you get this impossibility is because you make the wrong assumptions. You assume that there is one channel (for a very specific definition of channel), which everyone has to share.

In reality this is just not true. By using directed antennas for instance we can create more channels. By using polarized waves we can create more channels.

zobzu5• 12 years ago

you're not adding more spectrum - my point - its a finite resource. you can also emit lower power and add more cells since they wont interfere.

but theres only so many details you can put in a comment post without making it 20 pages.

cma2• 12 years ago

With multiple sending and receiving antennas and spatial encoding (specialization of MIMO) you can receive and send more data over the same spectrum and basically just make use of a second (or third) "straw".

rayiner2• 12 years ago

I pay $70/month for TMobile with unlimited LTE. My coverage isn't as good as ATT while traveling, but its fine where I live. Is this a sign of "gouging?" That it costs more for a service with good coverage in the less populated parts of the sprawling US?

Why are 4G prices higher in US? Demand is higher. Supply is more costly to build. Econ 101.

ryanobjc• 12 years ago

This article was about how supply is actually also getting cheaper. LTE base stations get more out of fixed bandwidth allocations, and cost less as well.

Perhaps you can also tell us what Econ 101 has to say about oligopolies, high barrier to entry and natural monopolies.

altcognito• 12 years ago

That it costs more for a service with good coverage in the less populated parts of the sprawling US?

Did you read the part of the article where they compare to Canada which is paying less than us for more bandwidth? Compare population density there with here.

It's not as simple as supply and demand either. If your infrastructure is being utilized heavily (efficiently), therefore delivering your more customers for the same equipment compared to another region, then you come out way ahead.

foobarqux• 12 years ago

Oligopolies are likely to have some price effect.

stephengillie• 12 years ago

I've gone without phone or data service on my cell for a couple years, getting by entirely on Wi-Fi, and using Google Voice for the handful of occasions when I needed to call someone.

When I signed back up, I was happy to get unlimited data again, for less money than I'd been paying a few years ago. Back then, it was extra for a data plan, and extra for a "smartphone" data plan -- making my bill over $100. Now, I'm paying less than I was after corporate discounts were applied to my old plan.

And mobile data, even just 3G, is fast. And often I'm upshifted to HSPA or 4G, which is faster than the Wi-Fi in some bars. Plus apps and websites are built to use less data than a couple years ago, using AJAX and other methods to cache and reuse more data on the device, such as UI elements and layout. The app is just the mobile browser page, and that is a client that calls an API, minimizing repeated network calls.

dankoss2• 12 years ago

This article is seriously flawed. Yes, 4G transmission is more efficient for the allotted wireless spectrum, but users are guaranteed to be using more bandwidth, so the effective number of users per tower stays the same or decreases. And it costs more, not less for 4G rollouts.

acdha5• 12 years ago

If users are on the same limited plans they're not using more bandwidth over any appreciable time scale.

dankoss2• 12 years ago

I'm not talking about data use, I'm talking about instantaneous data rate. Base stations are designed to handle a particular maximum throughput for a given number of users relative to the available spectrum in that area. The maximum throughput needed for many users on a 4G tower will be much higher than it is for 3G, it isn't the same or less.

freefrog334433• 12 years ago

Each tower supports more voice channels, and given than voice has higher priority than data and most people use mobile phones for calling, then each tower does support more subscribers. In Cambodia, prices have been dropping - 3.5GB on 3.75/4G networks costs $5/month. The competition between mobile companies is intense, and Cambodia seems to be leading

pfisch• 12 years ago

This article seems like it was written by someone who has little if any knowledge about cellular tech.

droopybuns• 12 years ago

Yes. Embarassing.

I would love to live in a world where increases in RAN efficiences doesn't result in increased backhaul demands.

The carriers are screwing us because the Internet Is MAGIC!

dang• 12 years ago

This would be a better comment if, instead of just putting down the author, you taught us some of the relevant things you know.

gourneau• 12 years ago

ProTip: I just called AT&T today and asked when my contact ended, because I was considering going to T-Mobile. A few minutes later they offered me the approximately the service for half the cost.

justinsb3• 12 years ago

Indeed. Prices _have_ come way down, but the carriers are engaging in price discrimination (quite rationally). You don't get the new prices automatically, you have to switch carriers/plans or persuade your current carrier that you are going to do so.

pyre• 12 years ago

On the other hand, such price discrimination reminds me of things like this:

http://blogs.computerworld.com/node/3538

rtpg• 12 years ago

Actually in Japan 4G plans are cheaper, presumably because the 3G networks are so oversubscribed that carriers are trying to get people to swap (and buy new phones in the process).

guelo• 12 years ago

Prices are coming down because the government prevented the ATT-Tmobile merger and Tmobile decided to start competing on price. Thank goodness for a little government regulation and that created competition.

jwallaceparker12• 12 years ago

Government regulation doesn't create competition.

Edit: It's remarkable that any statement regarding regulation that isn't overtly Marxist immediately gets half a dozen down votes on HN.

DrJokepu• 12 years ago

Except when it does? There are like, plenty of examples of government regulation creating very real competition? For example, there is fairly decent competition in the ISP market of the United Kingdom thanks to the Enterprise Act 2002 that requires British Telecom to share its local infrastructure with its competitors. Otherwise, it would be like in many places in America: you can choose Comcast, or if you feel really adventurous and you really thought it through, you can choose Comcast too.

seizethecheese2• 12 years ago

That is the definition of antitrust regulation.

panarky• 12 years ago

Adam Smith described how free markets can deliver socially beneficial results when individuals and firms compete vigorously with each other.

Since when does ensuring vigorous competition equate to Marxism? Seems pretty capitalist to me.

peterashford• 12 years ago

Government intervention is practically required to allow competition. Any market left to its own devices will devolve into a monopoly. Governments are required to regulate to avoid monopolies thereby preserving a level playing field on which competition can occur.

When Adam Smith was talking about a "Free market", the freedom he was talking about was freedom to enter and freedom to exit a market. That is, freedom from barriers to market. These freedoms are guaranteed by governments. Businesses left to themselves will raise the barriers to market thereby making the market non-free in Smith's terms.

Oh, and pointing this out is not "Marxist".

acdha5• 12 years ago

If you think using regulation to keep markets functioning is a Marxist, don't complain about down votes until you learn some basic economics and history from sources other than industry propagandists pretending to be libertarians.

djchen• 12 years ago

Completely agree. I stopped using contract wireless services since a few years ago and have been able to consistently pay less and get more than before.

Currently using AT&T GoPhone's new $45/30days "Walmart" plan with unlimited talk/text and 1GB of data. Its much less than on contract. Prices are falling, you just have to look beyond a contract.

lucaspiller• 12 years ago

Oh wow, that is expensive. Here in the UK on prepay Three offer 25GB/30 days (marketed as "unlimited") for $25 (£15). Bonus: You get LTE where available for no extra charge.

ekianjo2• 12 years ago

Thank goodness for a little government regulation and that created competition.

Heh. Funny comment, since it's the government who created in the first place the band of 3/4 major actors in very country, by restricting the entrance with a system of auctions to get access to mobile frequencies.

That's precisely because we lack competition that the prices are not coming down, and that's what the government has been preventing for ages in the mobile industry. With 3/4 key actors it's very easy to have everyone meet for dinner and agree on fixed prices that are not going to move.

adanto6840• 12 years ago

Maybe I'm naive, but how else would you prevent interference -- or even a nefarious "competitor" from otherwise "using" the frequencies? I know very little about radio waves/signals, but AFAIK a HTTP-type approach wouldn't work without a lot of up-front collaboration and a free market wouldn't have went that direction either, correct?

justinsb3• 12 years ago

Without getting into the whole rabbit-hole of monopolies/government good vs evil... Do you see any realistic alternative to an auction allocation system for mobile frequencies?

badsock3• 12 years ago

The mobile sector is a great example of a natural monopoly:

http://en.wikipedia.org/wiki/Natural_monopoly

In this case, competition is the problem not the solution. It makes no sense to build out massive cellular networks in triplicate.

Connectivity could be provided much more efficiently at the municipal level, like water. Certainly, my experience with city water has been orders of magnitude more pleasant that with mobile providers, many times cheaper and more reliable, and I really don't see one as being harder to provide than the other.

trollied• 12 years ago

The blogger is full of crap. 3G base stations don't automatically upgrade themselves to 4G. It costs a fortune to upgrade each tower. The backhaul also has to be upgraded to cope with the extra bandwidth that the tower can cope with due to the increased spectrum efficiency (more data in the same frequency space due to SCIENCE!).

johnny5• 12 years ago

Can you expand on why it costs so much to upgrade a basestation? the fiber is already rolled out, the contracts between land owners have already been signed, the surveys for radio propagation have already been done. I honestly don't think the upgrade from 3g to LTE was nearly as expensive as the upgrade from EDGE/2g networks to 3g was for carriers. Also it was much, much quicker for them to roll out LTE networks vs 3g networks.

hansy• 12 years ago

Completely irrelevant but I can't help myself given the milkshake example provided in the article.

Milkshake scene from the movie "There Will be Blood": http://youtu.be/s_hFTR6qyEo?t=1m20s

nargella• 12 years ago

Like a year ago I wanted to see if there was a way to get an unlocked sim not tied to a carrier and just use data. Reason being, I wanted to see how much I was over paying for voice [I have 1000s of unused minutes]. I wasn't able to find a data only sim option.

But by a base line calculation I'm spending ~$300+/year over the cost of VOIP.

zw123456• 12 years ago

The difference between wireless technology and computing technology is that wireless communication is limited by Shannon's Law which basically says that C ~= 1.44 * B(S/IN) where C is the information rate (i.e. bps) B is the spectral width (how much RF spectrum is being used to modulate the signal onto, and S/I*N is the signal to interference and noise ratio. Right now, LTE is very close to the Shannon limit, there is no Moore's law we are all familiar with. Most carriers face a choice of either obtaining more spectrum (which is limited resource and expensive) or increasing the SINR which is very expensive to do since it involves building more cell sites, if the tower is closer to the user the SINR goes up. I think often times the cost of maintaining the infrastructure around supporting tens of thousands of cell sites is under estimated. Yes the wireless companies are profitable, but no where near the kinds of profits the phone manufacturers are reaping where it costs them $50 to make a phone and charge the cell companies $500 for the phone, that huge mark up is passed along to the customer as part of their monthly bill because everyone expects their phone to be "free". It is no free, the cost is embedded in your monthly bill. The best way to drive down wireless costs in my view are to assert competitive pressures on the phone manufacturers.

rajacombinator• 12 years ago

My price went down massively thanks to the TMob kamikaze mission. 180->135 for 3 iPhones on ATT. Thank you TMob.

joshuaheard• 12 years ago

It seems like it is getting cheaper. I get unlimited minutes, texting, and 300 mb of data for the same $40 I was paying 5 years ago, but I was also paying extra for minutes, texting, data, etc.

briandh• 12 years ago

Cellular plans in the U.S. with 500MB of data cost about $85.

I highly doubt that. The piece links to [1] which in turn cites [2].

In [2] "Mobile-broadband prices are collected from the operator with the largest market share in the country", "prices applying to the largest city (in terms of population) or to the capital city are used", and a the 500MB plans are ones that include voice and text.

Moreover, the reported prices include taxes; while including taxes is necessary to accurately reflect the cost to consumers, it does not give insight into weather or not carriers are "gouging" consumers, which is what the RWW piece alleges.

AT&T charges $65 for unlimited talk and text and 2GB of data [3], Verizon $60 with 1GB [4], T-Mobile $40 with 500MB [5], Sprint $55 with 1GB [6].

I won't get into prepaid plans and/or MVNOs exhaustively, but for instance, Aio (AT&T's own MVNO) charges $35 for unlimited talk and text with 500MB of unthrottled data if you enable auto-pay [7].

According to a 2011 report [8], the average tax rate is 16.26%, which would still only bring the most expensive plan I mentioned (AT&T's) to $75.57.

Based on that, unless there is a very large number of consumers on old plans that have not been brought down to current prices (and I'm not sure if that even happens), I highly doubt that $85 figure.

[1] http://www.economist.com/blogs/graphicdetail/2013/10/daily-c... [2] http://www.itu.int/en/ITU-D/Statistics/Documents/publication... (page 112) [3] https://www.att.com/shop/wireless/data-plans.html [4] https://www.verizonwireless.com/wcms/consumer/shop/shop-data... [5] http://www.t-mobile.com/cell-phone-plans/individual.html [6] https://www.sprint.com/landings/framily/?INTNAV=ATG:HE:Frami... [7] https://www.aiowireless.com/shop/plans.html [8] http://taxfoundation.org/article/states-target-cell-phones-s...

paulhauggis• 12 years ago

I get 5GB of 4G data and unlimited 2G after that for $30 in the US

rudedogg• 12 years ago

Through?

jzs• 12 years ago

You really need competition on your networks. In Denmark the carriers are forced to rent out their networks to competitors so that we don't get a monopoly.

Currently i pay ~37$ for unlimited speech, unlimited sms/mms and 10gb data a month. Oh yea and no roaming charges in sweden, italy, UK, ireland, hongkong and austria. The list of countries might grow since the european union is considering removing roaming charges completely within EU.

JacobAldridge3• 12 years ago

Hey patio11, you're spending less time on BCC these days so even though the feature set is the same you SHOULD be charging less.

Hey colinp, your backend AWS costs have come down, so you SHOULD be charging less for tarsnap [1].

Hey you (yes, you), ignore everything you've read about surviving as a startup. You SHOULD be charging your customers based entirely on your cost base and ignoring any conversation about the value your customers receive.

[1] Is that even possible?

hyperbovine2• 12 years ago

TarSnap dropped its prices five weeks ago.

JacobAldridge3• 12 years ago

A move not-well-received by proponents of value-based pricing - http://www.kalzumeus.com/2014/04/03/fantasy-tarsnap/

patio11• 12 years ago

I might advise not phrasing this sort of advice sarcastically on HN, as I know there is a substantial contingent here which would actually believe that software being mostly done implies that the price should go down.

EGreg• 12 years ago

Actually didn't TMobile recently defect and then the others followed suit? AT&T lowered my prices recently!

bberrry• 12 years ago

Meanwhile, in "socialist hell-hole" Sweden, I have an unlimited calls, texts and 4G data plan with these speeds http://i.imgur.com/62yT2ig.png (45Mbit down, 7.5Mbit up)

It costs me ~$48 per month. I average around 10-12gb per month, but don't have to worry about any charges when tethering my laptop to the 4G.

tim333• 12 years ago

And for what it's worth in even more socialist hell hole Vietnam I got a prepaid SIM with voice and 2GB of data for about US$9. Only 3G sadly enough but fast enough.

Aloha2• 12 years ago

There are two first would countries in the world comparable to the United States, and one of them is only an almost.

Australia - Widely dispersed population, universal coverage hard to build out, environmental factors. Unlimited Voice/SMS/MMS 2.5gig data allotment - 121.73 USD (Telstra)

Canada - Population in a small band near the border but many rural areas must be covered by mandate, universal coverage expensive to build out, environmental factors. Unlimited Voice/SMS/MMS 2 gig data allotment - 82.61 USD (Rogers Communications)

United States - Population widely Scattered, many rural areas without significant infrastructure improvement raising construction cost for bearer facilities hence huge construction costs in 4g rollout. Unlimited Voice/SMS/MMS 2 gig data allotment - 75 USD (Verizon Wireless)

Beyond the above - there has never been a time in the last 10 years where there was not a major network rollout in progress by the major carriers in the US, first they built the digital networks (96-2001) then the 2.5g rollout (EV-DO/EDGE (2001-2007) then the 3g Rollout (EV-DO Rev A and HSDPA) (2007 - 2009) now the 4g Rollout (WiMax then LTE) (2009 to Current). This has been the case world wide - but because of the geographical features of the US (higher construction costs and lower density) our telecom costs will always be higher than Europe and Asia.

the_imp2• 12 years ago

Finland - Unlimited voice & SMS/MMS + uncapped data at 2MBit/s: 35 USD/month, but that's without a contract. If you're ok sticking with the same provider for two years, you can get the same with 50MBit/s uncapped data. On the other hand, if you're fine with 256 kbit/s uncapped data and paying 0.10 USD per minute or SMS, it's just 4 USD/month.

Our population density is on average half that of the USA (16 people/km2 rather than 32 people/km2), and we're just as dispersed. The coverage of the above-quoted provider you can see here: http://elisa.fi/kuuluvuus/

Explaining the high cost of US mobile comms in terms of the situation in Canada & Australia doesn't work, all you're really pointing out is that it's far too expensive there as well. In other words, your friends are also being fleeced.

evgen• 12 years ago

Let me explain to you the difference between median and mean. Finland has an average population density that is half that of the USA but mostly because the population is heavily concentrated into six or eight islands around urban areas and the rest of the country has a very low population density. To serve 80% of the population of Finland I would need to provide service to less than 20% of its area. The US has many more urban centers, swaths of very low population density that are larger than most of western europe, and a high-density cluster along the eastern seaboard that would be the equivalent of providing Helsinki-level infrastructure over the entirety of Finland.

Not even close to similar.

Why Your Cell-Phone Bill Should Be Going Down But Isn't

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