With AT&T's new "capped" data plans and the opinion of some, that this is the end of the world as we know it, I've spent a little bit of time looking at both sides of this argument. Specifically, what advantage might there be to a "by-the-byte" data rate setup, as opposed to the "all you can eat buffet" we're used to here in the States.
Before I go further, let's get a couple of things established.
(1) AT&T is a for-profit company. This should be obvious, but it's still good the keep in mind what motivates them, and what doesn't. From their perspective, they're obligated to make money or there won't BE an AT&T.
(2) Charging $20 for tethering w/o any additional data is just stupid. I can't defend that.
With those points established, here's my thought:
With an "Unlimited All-you-can-eat" data plan, what motivation is there for a carrier like AT&T to improve their network?
They're going to get $30 in revenue regardless how much (or little) data you use. Let's say that providing 100mb's of data costs AT&T $0.75USD. If you use 2 Gigs, they make $15 of profit from you that month. Use 7.5 gigs and they actually LOSE money (in this imaginary $0.75/100MB world) to the tune of -$26.25!
But if you only use 200 MB, they make $28.50 in profit. (cue Mr. Burns... .....Excellent...)
That's almost an incentive to keep the network just barely passable. Afterall, the worse the network is, the less data you'll try to use, and the higher the percentage of that $30 AT&T will get to keep. Think about it. At only 150kbps how many songs are you going to try to download on AT&T's network? If your home/business wifi is 4500kbps, you'll probably just wait till you get home. Less data used equals more profits kept, so remind me again why the carrier "needs" to improve?
On the other hand let's look at the new data plans.
---$15/200MB plan. Ok, I have to say it. ...Got calculator?
---$25/2GB plan. The first 2gigs cost $12.50 each. Every gig after that costs $10. Now this is what I'm talking about!
Also keep in mind that instead of overage charges at 4X or 6X the normal rate, AT&T is actually reducing the rate for extra data. So in effect, they are creating a plan where a power user is just buying as much as he/she needs, like it was any other commodity. Want 1.5 gigs? Cool that'll be $25 ($13.75 profit), Want 3.5 gigs? ($18.75 profit),How about 7.5 gigs? ($28.75 profit)
Instead of AT&T's profit being tied only to the number of subscribers (x $30 fixed fee) MINUS the cost for amount of data used, their profit is subscribers PLUS extra data used. The more you use the network, the more money the carrier makes!
So for example, if AT&T puts a solid 3 Mbps connection in your area, you would probably just download the music right then and there. Rock solid 7.2 Mbps? Oh yeah! If AT&T can establish a faster, more reliable data network, more data will be used, more gigs can be sold, and more profit can be made.
(cue Mr. Burns again...)
It may not be the perfect solution to the slow-data blues, but at least it gets the carrier motivated to actually improve the customer's experience. More data, more profit.
Sean
Before I go further, let's get a couple of things established.
(1) AT&T is a for-profit company. This should be obvious, but it's still good the keep in mind what motivates them, and what doesn't. From their perspective, they're obligated to make money or there won't BE an AT&T.
(2) Charging $20 for tethering w/o any additional data is just stupid. I can't defend that.
With those points established, here's my thought:
With an "Unlimited All-you-can-eat" data plan, what motivation is there for a carrier like AT&T to improve their network?
They're going to get $30 in revenue regardless how much (or little) data you use. Let's say that providing 100mb's of data costs AT&T $0.75USD. If you use 2 Gigs, they make $15 of profit from you that month. Use 7.5 gigs and they actually LOSE money (in this imaginary $0.75/100MB world) to the tune of -$26.25!
But if you only use 200 MB, they make $28.50 in profit. (cue Mr. Burns... .....Excellent...)
That's almost an incentive to keep the network just barely passable. Afterall, the worse the network is, the less data you'll try to use, and the higher the percentage of that $30 AT&T will get to keep. Think about it. At only 150kbps how many songs are you going to try to download on AT&T's network? If your home/business wifi is 4500kbps, you'll probably just wait till you get home. Less data used equals more profits kept, so remind me again why the carrier "needs" to improve?
On the other hand let's look at the new data plans.
---$15/200MB plan. Ok, I have to say it. ...Got calculator?
---$25/2GB plan. The first 2gigs cost $12.50 each. Every gig after that costs $10. Now this is what I'm talking about!
Also keep in mind that instead of overage charges at 4X or 6X the normal rate, AT&T is actually reducing the rate for extra data. So in effect, they are creating a plan where a power user is just buying as much as he/she needs, like it was any other commodity. Want 1.5 gigs? Cool that'll be $25 ($13.75 profit), Want 3.5 gigs? ($18.75 profit),How about 7.5 gigs? ($28.75 profit)
Instead of AT&T's profit being tied only to the number of subscribers (x $30 fixed fee) MINUS the cost for amount of data used, their profit is subscribers PLUS extra data used. The more you use the network, the more money the carrier makes!
So for example, if AT&T puts a solid 3 Mbps connection in your area, you would probably just download the music right then and there. Rock solid 7.2 Mbps? Oh yeah! If AT&T can establish a faster, more reliable data network, more data will be used, more gigs can be sold, and more profit can be made.
(cue Mr. Burns again...)
It may not be the perfect solution to the slow-data blues, but at least it gets the carrier motivated to actually improve the customer's experience. More data, more profit.
Sean
