Verizon Wireless 4G Caps "Unfair"?

Verizon Wireless boss Lowell McAdam reportedly said at a Barclays Capital conference that Verizon Wireless likely will move away from unlimited plans on the 4G Long Term Evolution network, instead charging for 'buckets' of megabytes.

That is one more sign of the direction the entire industry will take. Some observers think this is somehow unfair. They sometimes base this belief on the lower "cost per megabit per second" or "cost per transferred megabyte" of a 4G network, compared to a 3G network.

It is no more inherently unfair than a company lowering its headcount, wage rates, reducing advertising or any other steps it may take to keep costs in line with anticipated revenues.

The fundamental trend in the communications business is that the "retail price" of bandwidth keeps dropping. When that happens, providers must sell more units to maintain flat revenue. In a business that also has major declining lines of business, any entity must, over time, reduce its costs in line with the revenue drops in those lines of business as well.

The net effect is a need for greater efficiency, and the lower cost per bit of a 4G network is part of that effort, as much as it is a hedge against constantly-growing bandwidth demand.

Moore's Law adequately captures the typical pace of semiconductor density change. But most of the rest of the natural world cannot improve its performance metrics at that pace. Not batteries, not construction, transportation, manufacturing or marketing cost. Greater efficiency in the transmission network is simply part of preparing for a future where bandwidth costs, per unit, will keep squeezing.

Verizon looking at non-unlimited plans for 4G data

AT&T's New Data Plans Will Save Most People Money

BillShrink co-founder & CEO Schwark Satyavolu says AT&T's new data pricing plan is a good thing. Customers will now have the option to save hundreds of dollars over the course of their 2-year contract, and it's just an issue of figuring out how much data you use.

Plus, the cheaper plans could send iPhone and BlackBerry sales through the roof.
However, pricing could be an issue in the future if data usage continues to increase at the rate it has been over the past year and a half.

Here's How AT&T's New Data Pricing Plans Will Save Most People Money

Video Snacking, Not Feasting, is One Impact of New AT&T Tariffs

AT&T's latest realignment of its smartphone wireless data plans based on how much bandwidth they use is hard to characterize in a uniform sense. Heavy users won't like it, but the plans reflect more realistically the value they derive from the network.

Lighter users might find they actually can save money by switching plans. Lots of non-users who believe they are likely to be light users will benefit. Moderate users will have to think about whether to keep their unlimited $30 plans or switch to the $25 plan.

The clearest impact will be on new users signing up starting June 7, as the difference between the unlimited plan and the 2-Gbyte plan will mean users will likely wind up snacking on video rather than feasting. That doesn't mean actual behavior even under the old plan would have been much different. Users likely were mostly snacking, to begin with.

It's just that the 2-Gbyte cap will encourage people to watch their video consumption more closely.

And that likely is modestly bad news for the mobile video industry, to the extent that revenues are based on subscriptions or advertising. In the first case it will be harder to sell a recurring subscription service when users are not sure what it will cost to use the service, in terms of bandwidth charges.

In the latter case people will be watching less video, therefore being exposed to fewer ads, and resulting in less activity that can be monetized.

Even AT&T's high-end, $25 monthly plan, including 2 GB of bandwidth, can be used up in less than a day of watching video. And while AT&T's $10 per GByte overage charges are much more reasonable than previous industry charges, they're still unlikely to be popular.

A two-hour movie, even compressed, could use upwards of 500 MBytes of data. that could mean variable and unexpected charges, and consumers hate that.

 link

Comcast Launches Usage Meter: Some Users Might be Surprised

Comcast is launching a "free to use" data usage meter in the Portland, Oregon market, with plans to roll the application out nationally. . The meter will help customers understand how much data they consume in a month. It is an essential sort of tool if users someday are required to buy data packages the way they buy mobile buckets of voice and data.

That is not to say Comcast has any current plans to do so; simply to point out that since few, if any, consumers know what their usage pattern actually is, they certainly cannot be expected to be rational consumers of subscription plans that require such knowledge.

Nor will most users have any problems, even if retail pricing plans were to change, someday. Comcast defines "excessive use" as consumption above 250 gigabytes a month, and the median usage for Comcast’s customers at present is about 2 to 4 Gbytes a month.

The meter is accessible by logging in to "Customer Central" at http://customer.comcast.com and clicking on the “Users and Settings” tab. From there, click on “View details” in the “My devices” section (located toward the upper right hand of the screen) and that will go to the meter page. The meter will show usage in the current calendar month when it’s first launched. Over time, it will show the most recent three months of use (including the current month). The data is refreshed approximately every three hours.

The meter measures all data usage over a cable modem, including any other devices connecting using Wi-Fi. Online gaming consoles, smartphones using Wi-Fi,  digital video recorders, printers, cameras or the iPod Touch are examples.

The Windows operating system and most popular software applications have automated update programs. These updates often download and are installed automatically without the need for user intervention. The automation is generally designed for the convenience and protection of the consumer, but the traffic it generates may come as a surprise.

Cable modem connections supporting multiple PCs will have a correspondingly higher amount of such update activity.

Aggressive update settings, with some default settings checking each hour and downloading every possible option even though they are not all needed, could cause unexpected levels of traffic.

For example, a software program may load its interface in a dozen languages even though all household members only know how to read English.

Another possible “surprise” upstream traffic source is online file backup or uploading to photo sharing sites. Also, many news and information services preload content onto their subscriber's PC or smart phone over the Wi-Fi home network. The content often arrives overnight for convenient viewing in the morning.

Assume each night's upload is only 1GB, which takes up a modest 1GB on the device's storage, and assume too that it never consumes more than 1GB because it overwrites the old content with fresh content each night. That can add up to 30GB over a month on the meter.

A large volume of traffic may be going to digital video recorders such as TiVo. A user in the home may have rented a movie from Amazon, Netflix or Blockbuster. Renting the movie will be a known traffic-generating event. But many services also preload the start of other movies as well as trailers to make them instantly available should they be called for.

The meter will be a useful tool for managing both intended and unintended bandwidth consumption.

Do Usage Caps for Wireless and Mobile Broadband Make Sense?

Consumers say 60 percent of the wireless broadband decision is based on two factors: monthly recurring charge and existence or size of a usage cap. For that reason, "data caps" are a particularly unfriendly way to manage overall traffic, says Yankee Group analyst Philip Marshall. 

A better approach, from a service provider perspective, is to offer unlimited usage and then manage traffic usingreal-time, network intelligence-based solutions like deep packet inspection and policy enforcement, Marshall argues.

Some would argue that fair use policies that throttle maximum speeds when policies are violated is no picnic, either. But temporary limits on consumption, only at peak hours of usage, arguably is more consumer friendly than absolute caps with overage charges. 

To test consumer preferences, Yankee Group conducted a custom survey that included a "choice-based conjoint analysis," which allowed Yankee Group analysts to estimate the relative importance to consumers of key wireless broadband service attributes. The survey was taken by 1,000 mobile consumers who also use broadband access services. 

From the conjoint analysis, "we found that, on average, 59 percent of a wireless broadband purchase decision depends on two factors: service price, and the presence or absence of a 2 GByte per month usage cap," Marshall says. 

The results also indicate that 14.5 percent of a typical purchase decision is affected by service bandwidth, and that the implied average revenue per user lift when increasing bandwidth from 768 Kbps to 2 Mbps ranges between $5 and $10 per month.

The results also indicate, however, that there are diminishing returns for service plans that offer speeds above 3 Mbps, though speed increases might be useful for other reasons, such as competitive positioning. 

"Our price elasticity analysis implies that consumers are willing to pay $25 to $30 more per month for plans that offer unlimited usage, compared to plans that have a 2 GBytes a month usage cap," says Marshall.

"In a competitive operating environment, consumers will tend to migrate toward higher bandwidth services, all else being equal, but they are not necessarily willing to pay a significant premium for the added performance capability," says Marshall.

Our most recent survey results indicate that consumers require 2 Mbps to 3 Mbps bandwidth for their broadband service. This is likely to increase dramatically over the next two to three years, but the consumer survey suggests dramatically-higher bandwidth does not affect decisions as much as recurring price and existence of bandwidth caps. 

For example, when offered a choice between one package featuring a 2 GByte per month usage cap with 6 Mbps bandwidth, and another package with unlimited monthly usage but just 2 Mbps service speed, 63 percent of consumers opted for the 2 Mbps service with no cap.

Even when the choice is between an unlimited package offering only 768 Kbps bandwidth, compared to an alternative plan with 6 Mbps bandwidth and a 2 GByte per month usage cap, 57 percent preferred the 768 kbps package.

Service providers still must manage bandwidth demand though, with or without usage caps

Usage caps work to regulate demand, but users do not like them.

The other approach is not to impose the usage caps, but instead to use policy managment and deep packet inspection to manage traffic flows.

If such solutions are implemented in a non-discriminatory manner, so that all like services are treated equally, they can be implemented irrespective of network neutrality regimes currently under consideration, Marshall believes.

Bandwidth Caps a Competitive Disadvantage?

Time Warner Cable has shelved its plans to shift its residential broadband customers to “consumption-based billing”, at least for the moment, as a way of controlling excessive bandwidth use by a small number of really-heavy users and maintaining quality of service for other users who share the network. Short of investing in a higher-capacity access network, it isn't clear how some way of matching consumption to cost is avoidable, long term.

But that points out one advantage Verizon Communications has: it has ample access bandwidth to provide uncapped usage, which could become a marketing weapon wherever it competes with other providers who do impose caps or other sorts of restrictions.

http://www.bizjournals.com/triad/stories/2009/04/20/story5.html?ana=from_rss

Bandwidth Caps Driving Dissatisfaction?

One wonders whether consumer outrage about Time Warner Cable's bandwidth caps play some role in Time Warner Cable's low consumer happiness ratings.

Time Warner ranks on this March 2009 survey as low as Charter, which never has had especially high consumer satisfaction ratings.

Frankly, we are used to seeing Time Warner rank higher than this.

Ranking that low--equivalent to Charter-- is absolutely nothing to be proud of, and quite a change from past years.

http://www.pcworld.com/article/162928/time_warner_changes_but_keeps_bandwidth_caps.html?tk=rss_main

Time Warner Cable Shelves Bandwidth Caps

Time Warner Cable appears, for the moment, to be retreating from its bandwidth cap tests in four U.S. cities, temporary ending a controversial experiment that would have created new usage buckets.

Those plans would have featured a lighter user plan featuring 1 Gbyte per month of usage for $15 per month. About 30 percent of Time Warner Cable customers use less than 1 Gyte per month.

Other plans would have featured caps of 10, 20, 40, 60 and 100 GBytes, plus an unlimited plan for the highest-speed 50 Mbps service.