T-Mobile this week made news by dropping the 5Gb cap for its unlimited mobile data users — with a catch: once over that limit subscribers may see their service slowed down during busy periods and times of congestion. Such caps are common among wireless operators (and indeed wireline carriers today) but typically are part of the “small print” of customer contracts. By tying usage caps to quality of service levels, T-Mobile is following an approach used more broadly around the globe but much less in the U.S., where unlimited data (even with hidden limits) is still the norm:
Writes GigaOm on the development:
T-Mobile’s decision to slow speeds after a user hits 5GB per month is likely an answer to Clearwire’s unlimited mobile broadband offering, while also protecting the carrier for overloading its cellular network with a corresponding policy change. And as the next generation of wireless networks hit the market, such plans will become increasingly common.
Connected Planet’s take,
Kevin Fitchard:
It was bound to happen, but it’s interesting that T-Mobile was the first rather than VZW, Sprint or AT&T, which have many more mobile broadband subscribers on their networks. Basically carriers start lose money on their mobile broadband plans after customers exceed a certain number of gigabytes (I’ve heard the cut off is usually around 3 or 3 ∏ GB), so they have to find some way to limit usage after a certain point. The issue is whether there is an alternative to the rather draconian methods of strict caps and high overage fees.
T-Mobile is exploring one of those routes, throttling back speeds after customers hit the soft cap. The question is whether the reduced speeds will apply universally or only when the network is overloaded. If T-Mobile is able to identify its over-limit customers in real time as well as dynamically assess congestion on individual cells, it might choose to impose the slower download speeds only when there are other devices vying for the same capacity. If the capacity’s there and already paid, operators might as well let customers use it if it would otherwise go unconsumed. The end result might be a customer who notices very little difference between network performance pre-cap and performance post-cap. The question for T-Mobile is whether that’s a good thing.
That’s our take on this. Let us know what you think in the comments section below:
I am a firm believer in telling users what the issues are and letting them decide. The data issues faced by cell companies are similar to the electric grid in that the challenge is not overall service , but the need to build the network to serve peak demand times. I am thinking about non-rural areas that have multiple providers and an abundance of service choices.
Is it possible to have users pay more for peak demand time use? Is supply and demand pricing an option here? The cost of a plane ticket is highest around the holidays. Airlines raise the prices in order to limit demand for a limited supply of seats. Could the same is true for bandwidth? Those who really need it at peak times should pay for it. OR, they could also receive incentives to use local wi-fi during rush hour. Chances are that consumers don’t know where the hotspots are, but the cell carriers are getting better at making use of them. And if the carriers are serious about selling quality data plans, they need to move quickly.
When and if subscribers choose data plans with reduced peak usage, carriers can better plan for the future. If, for example, 15% of users purchase off-peak data plans, use of the network is better distributed over time. However, as long as users continue to increase their mobile usage, there is no end in sitght and the plan I describe only puts off the inevitable.