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Wireless Broadband: A Bountiful Garden of Consumer Choice, Pricing, & Plans… Not

Phillip Dampier June 6, 2009 Wireless Broadband 2 Comments
Engadget Labs expected a highly competitive shootout among the nation's top four wireless data providers. They found four carriers charging essentially the same thing for the same thing: $60/month for 5GB of usage

Engadget Labs expected a highly competitive shootout among the nation's top four wireless data providers. They found four carriers charging essentially the same thing for the same thing: $60/month for 5GB of usage

One of the frequent myths heard from telecom industry executives is that broadband is a highly competitive marketplace, with lots of choices and a diversity of pricing plans to meet the needs of every subscriber.  That’s why they should be allowed to set whatever pricing, terms and conditions, throttles, caps and tiers they wish — after all, there are plenty of other choices.

Not exactly.

In addition to the duopoly wired broadband marketplace in most cities (one cable company and one telephone company), outside of dial-up or the occasional wi-fi network, there is always wireless Internet provided by mobile phone companies.

Engadget Labs just completed an excellent, comprehensive review of the nation’s primary wireless data providers — AT&T, Sprint, T-Mobile, and Verizon.  They were searching for the answer to the question, “what is the best mobile data provider in America?”  They anticipated a range of service offerings, speeds, and prices.  What the ended up with is a realization that, at least when it comes to prices, it’s as simple as can be.  The nation’s four largest providers all charge the same thing for the same thing: Up to 5GB of usage for $60 per month.  Your actual speeds, overlimit fees, coverage, and promotional sign-up deal may vary.

Sadly for consumers, we can’t compare these options on monthly throughput allowance or monthly rate plans. In a fashion that only a colluder could love, the big four here in America all have matching monthly rate plans with matching monthly caps (5GB). So much for choice, right?

There is also no need for any “experiments” in usage caps on wireless data.  They all offer precisely the same limits.  Why experiment when you can simply match the competition, charge the same price, and sit back and cash the checks?

Contrary to popular belief, all four major US carriers offer capped mobile broadband plans to consumers. In other words, it’s not unlimited. In fact, you’ll only get 5GB of throughput per month before those nasty overage charges start to kick in, so you should go ahead and cast aside those dreams of using an AT&T data stick to replace your in-home cable internet service. We can’t say we like the cap, but that’s just the way things are at present time — hopefully we’ll look back in a year or so and laugh at the preposterousness of plans past.

I wouldn’t hold my breath.  Once a carrier puts a cap on, it can be extremely difficult to get rid of it.  Considering the capacity of wireless providers to expand bandwidth is hampered by spectrum availability and the speed race that seems to be getting a higher priority, controlling usage on your network to make sure customers don’t “abuse it” is paramount for all of these carriers.  Exceed your cap at your financial peril.  Overlimit fees are designed to punish:

  • AT&T: $0.49/MB
  • Sprint: $0.05/MB
  • T-Mobile: $0.20/MB
  • Verizon: $0.05/MB

(Verizon & AT&T charge different overlimit fees on lower-priced, lower consumption tier data plans.)

As far as speed goes, even a slow DSL account should be able to perform better than wireless “broadband” data services available today.  Engadget reports these speed results:

  • AT&T: 239.01KBps down; 77.95KBps up
  • Sprint: 121.27KBps down; 36.94 KBps up
  • T-Mobile: 127.33KBps down; 54.05KBps up
  • Verizon: 102.9KBps down; 63.22KBps up

Engadget’s summarized points to consider:

  • Every major plan runs right at $60 per month for 5GB of throughput.
  • Sprint is the only carrier that avoids dinging you with an activation fee.
  • AT&T and T-Mobile are the only two with true worldwide roaming support (GSM bands).
  • International data roaming is absurdly expensive; you’re infinitely better off just buying a prepaid data card in the country you travel to.
  • AT&T offers the most data card options; T-Mobile offers the least (just one).
  • Even domestic overage charges are pricey; don’t buy a data card to act as your primary ISP — this stuff is for backup / traveling only.
  • Sprint will cut you a $9.99 discount if you bundle a data card in with a phone in a Simply Everything package.

Currently there are 2 comments on this Article:

  1. Smith6612 says:

    Good article here. I do agree for the fact that wireless broadband is awfully expensive, which is typically why whenever people are looking at internet services from dial-up, I tell them to look at wireless and satellite as a last resort. The last I checked, Alltell (?) is reselling Verizon service via Broadband that is also uncapped in terms of wireless, though since Verizon is acquiring them people aren’t sure on how long that uncap issue will last.

  2. Tim says:

    For one, cell phone plans are way too expensive in the first place. And when you do get a cell phone, they purposely put proprietary connections on the phone so you have to buy the adapters from them. Sorry, had to vent that.

    It is ridiculous that they are all the same and there should be a investigation into this to see if they have indeed colluded to prevent competition. Just here recently, LG and some other LCD manufacturers were caught price fixing and fined.

    http://news.cnet.com/8301-1001_3-10095219-92.html

    “The three companies, which were charged with violating the Sherman Antitrust Act, allegedly held “crystal” meetings and engaged in communications about setting prices on the TFT-LCD displays. They agreed to charge predetermined prices for the displays, issued price quotes based on those agreements, and exchanged sales information on the display panels, in order to monitor and enforce the agreement, the Justice Department said. ”

    I don’t know if the same would apply here but I don’t see how it is any different. To me, it sounds like the same thing is going on here.

    With that said, Cricket is offering wireless for $40/month. I don’t know what the coverage is or what areas Cricket offers this, just throwing it out there.

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