Throttling versus overage, what’s the best way to handle mobile data?

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After Apple’s iPhone became available in the summer of 2007, and then Google’s Android operating system launched in the fall of 2008, mobile operators had to increasingly deal with the explosive growth of data flowing through their networks. In many parts of the world, the unlimited data plan has become an extinct species, but just how should an operator charge for access to mobile data? In one corner you’ve got T-Mobile, who offers you a data bucket that ranges in size from several hundred megabytes to 10 gigabytes. They’ll deliver that data to you as fast as your device can download it, and after you pass your allotted usage you get throttled down to speeds that are equivalent to browsing on EDGE. That’s not really a bad tradeoff since for most folks browsing Facebook, Twitter, and a website or two, EDGE is fine. In the other corner you’ve got AT&T and Verizon, who will again offer you data in various sized buckets, but once you use up what you’ve paid for they start charging you overage fees. How do other countries tackle the problem?

Over in the UK, 3 recently launched their “One Plan” that actually returned unlimited data back to the market after a long absence. They don’t mention whether or not they throttle after a certain amount of “fair use”, but we wouldn’t be surprised if they did. And in Australia, with Telstra, they just decided that overage charges are lame and will instead throttle, similar to what T-Mobile does. Then you’ve got Finland, which we know is a small market, but their largest operator, Elisa, throttles by default, but they offer you a range of speed tiers, each with unlimited data, so you can pick what sort of access you want to internet on the go. They’re essentially copying the model that many of us are familiar with in the fixed broadband world, where your cable or DSL company offers you faster internet if you pay more, but never in their right mind would they start charging you for bits.

This isn’t a question of who’s right and who’s wrong since businesses need to generate revenues and profits to keep themselves afloat, but if you had to ask us we’d prefer to see Finland’s model become the default way operators around the world offered data services. Grandma doesn’t need the full speed of Verizon’s LTE network, but at the same time the few instances when she checks photos of her grandchildren on Facebook her usage doesn’t exactly warrant Verizon charging her what they charge little Timmy, who watches multiple YouTube videos per day in school when he should be studying, and streams music from services like MOG, Google Music, or Rdio.

We’re curious to see where the market goes, but we’re not really hopeful that the big players in the USA will finally start caring about their consumers, especially if the acquisition of T-Mobile by AT&T is approved.

Update: Check out this video where Light Reading asked folks at CTIA 2011 whether they’d like to be throttled or capped.

  • http://twitter.com/bconner1 Brian Conner

    I think it’s a fact that we’ve become an on-the-go data crunching nation. I think the wireless carriers need to adapt to this and not punish users.

  • http://twitter.com/WillieFDiazSF William Diaz ?

    I prefer Unlimited Data at Full Speed – and the price should be reasonable to the voice and text plan on a phone. PERIOD!

    If there MUST be some limits, then I prefer the hybrid speed throttle approach. If you buy 4G Speed, then you get X amount of data per month. 5GB and 10GB plans should be the only plans offered. People generally do not need more than that. After that, your speed drops down to the next lower speed option, in this case 3G, which is still fast, but not enough for you to tie up the entire network for long periods. I mean, who wants to try watching something over 3G now-a-days? IF you have a 3G phone and go over the 5GB and 10GB plan, you go down to EDGE or EVDO Rev. 0 speeds. And of course if you have EDGE phone you go to GPRS, and respectively if  you have an EVDO Rev. 0 phone you would go down to 1XRTT speeds.
    While the data after that point will remain unlimited, people will be more conscious to using less data to ensure they get faster speeds when they need it later in the month.

    Another way of doing it is Flex Price. You start off with 3GB or 5GB and for each additional GB you use its another $5.00 to the bill, but you keep the same speed thoughout the month of usage. I like EITHER of these if “Unlimited” data is going bye bye.

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