Jun 2, 2010

The economics of data

So, AT&T changed its mobile data usage rates — from now on, you’ll need to pick between a 200 megabyte per month plan for $15 or 2 gigabytes a month for $25. This replaces the previous plan, which was unlimited data for $30 a month.

Most folks recognize that this is actually ok 1. If you log into your AT&T account, you’ll probably find that you’re somewhere between the 200 megabytes and 2 gigabyte limits so you’ll be paying $5 a month less than you were. Those numbers seem a bit arbitrary to me but I’m guessing AT&T has well paid accountants tasked with figuring out just the right sweet spot to wring the most bucks while pissing off the fewest number of people. I seriously doubt many people will downgrade to the 200 megabyte plan but even fewer even come close to hitting the 2 gigabyte ceiling. Right now, 2 gigabytes is effectively unlimited, though this could change soon enough, once we start streaming our music or television everywhere all the time.

Frankly, this strikes me as reasonable. I’m no AT&T fanboy (oh god, does such a thing exist?) and I’ve certainly oft criticized their poor network performance but, as I understand it, at least part of the problem has to do with a small percentage of users who use a disproportionate amount of bandwidth. I don’t know much about the intricacies of scaling out cell phone networks, but this strikes me as plausible and moving to a metered approach seems like a reasonable step in helping to solve the problem. You can only add so many towers, especially in crowded, data hungry cities like New York and San Francisco.

Of course, not everyone is reasonable and, well, haters gonna hate. Within an hour of the news, pundits like the insufferable Jeff Jarvis had spewed off a stream of tweets and a blog post about how “evil” and “cynical” this new move is, complete with plenty of #fail hashtags. It’s like Jarvis doesn’t understand basic economics — funny thing, when you charge people more for a limited commodity, they use less of it. Crazy, I know.

Seriously, look at that. Does Jarvis actually do anything but sit around and bitch and moan all day?

Listen, I’d love it if I could get unlimited ultrafast bandwidth everywhere all the time WITH A PONY but that part of the future hasn’t distributed itself just yet. Maybe it’s coming some day, maybe it’ll never be here and we’ve all been kidding ourselves. Here, today, in 2010, bandwidth costs money and you should probably pay for it when you use it. Most people are going to end up paying a little bit less, “power users” like Jarvis will probably pay a little bit more. Or maybe they’ll spare us all from their ranting and actually think a little before they tweet — just imagine the bandwidth savings.

UPDATE: Isaac Hepworth has smarter things to say about “unlimited” bandwidth. He uses words like “function of data transport” and “decoupling” and generally has a much better understanding of this than I do.

  1. The tethering fee is bullshit, though 

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