Broadband

Memo to wireless carriers: 5GB caps won't replace cable companies

According to TR member dcolbert, if wireless broadband ISPs can't provide their services at competitive prices to wired broadband providers, without outrageously limiting caps, they're never going to compete with, let alone replace, those companies.

Ivan Seidenberg, the CEO of Verizon, claimed that "cord-cutting" will threaten cable TV in the near future. He argued that savvy younger users are smart, price-conscious, and will find alternatives to cable TV - solutions that we must presume will be received wirelessly if they've cut the cord with their cable company.

In almost the same breath, Seidenberg discussed how Verizon was following AT&T's lead and adopting tiered data plans on the Verizon Wireless network. This is all old news. In fact, at the time of Seidenberg's announcement, Verizon's "unlimited" data plan already had a 5GB cap in place. Instead of charging for overages, Verizon simply throttled your bandwidth after you exceeded 5GB of data in a single month.

At the beginning of the year, even Virgin Mobile - one of the last wireless carriers to offer truly unlimited data - decided to replace their MiFi 2200 $40/month unlimited data plan with the familiar 5GB cap. A few weeks later, they changed that plan to 2.5GB for $50/month. Similar to Verizon, once you've exceeded Virgin Mobile's new cap, your bandwidth is throttled.

According to Virgin Mobile, 5GB is an extraordinarily large amount of data to consume in a month's time, and only their most data-hungry subscribers come anywhere close to that limit. This is a claim that AT&T and Verizon Wireless have both made as well - so, it's safe for us to trust these three companies, right? After all, they must be studying data consumption and know the typical consumption rate for their average customers.

Well, I believe there's a flaw in the data they're presenting to consumers. The typical data consumption on small handheld portable devices (i.e., smartphones) is probably far under 5GB. However, the average household consumption over cable, DSL, and other broadband connections is likely much higher.

I've been wondering about this theory for awhile and researching various ways to go about tracking my monthly data consumption. Unfortunately, there are only a few inexpensive, easy ways for average consumers to track their total data usage:

  1. Set up some sort of a proxy server and funnel all of your connecting machines through that.
  2. Install software on each machine to track all data with an external destination or coming from an external destination, and then collate the results from all of the machines on your network.
  3. Find hardware that sits somewhere between your network and your broadband gateway that will keep metrics on your outgoing and incoming traffic consumption. This is obviously the most reliable and easiest to implement of the three, but there are very few consumer choices for hardware with this kind of capability.

I previously had a Belkin MIMO Wireless G router that I was very dissatisfied with. After returning home to find the router reset, the password removed, and an incoming record from an IP address traced back to China in the logs, I decided that it was time for something new.

A little research turned up the NETGEAR N600 (WNDR3400) as a strong contender, and when I found out that it had a traffic meter, I was sold. Since I couldn't wait for it to be shipped, I paid the $20 premium "Best Buy tax," brought the device home, and hooked it up. Once I had my security set up, established network connectivity, and had everything tested, the first thing I did was enable the bandwidth meter, setting it to a 5000MB/monthly limit with an alert at 4500MB.

I've been keeping a close eye on the daily traffic meter since the beginning of February. My daughter typically browses kid-friendly sites and downloads videos from YouTube, but she still spends most of her time offline. My wife rarely does more online than visit some shopping sites and keep up with friends on Facebook. My habits are generally similar. We've watched one Netflix movie so far this month, but we haven't streamed Pandora music or other "high bandwidth consumption" activities. As of the 9th, we were at 4500MB of data consumption.

Let me just say that I'm going to need a far more generous allocation of bandwidth than the small 5GB caps that wireless carriers think is "more than sufficient" for the average wireless broadband user today. Keep in mind, the idea is that I should be cutting the cord with my cable company, getting my streaming entertainment alternatives over the wireless provider's network, and enjoying the advantages of mobile high speed Internet that travels with me when I leave the house. Except, even in very moderate use, I consume 5GB of data in about 10 days at home.

I'd be willing to pay a reasonable premium and give up a little speed and latency for a reliable, fast, portable and reasonably unlimited broadband connection. But if Seidenberg and other wireless broadband ISPs can't provide their services at competitive prices to wired broadband providers, without outrageously limiting caps, they're never going to compete with, let alone replace, those companies.

In the early days of subscription service technologies, it was not uncommon for people to consistently run up very large monthly bills. I remember the days of premium services and outrageous bills on Quantum-Link, which eventually became Q-Link, which eventually became AOL. At the same time, stories about people running up a fortune in bills on their cable companies (with pay-per-view and music-videos-on-demand services) were all over the news.

Back then, a $200 monthly cellular bill with Cellular-1 wasn't uncommon, and if I was very chatty, it might be as high as $400. Let's not forget, of course, that $200 a month was a lot more then than it is now. All of these companies would like to see a return to those days, but the rise of the mom-and-pop ISP with a $19.99 "all-you-can-eat dial-up smorgasbord" and "all the free content you could care to search for" seems to have changed all that.

Seidenberg is right, today's consumers are smart, and they're not going to pay for something they don't have to. In fact, I think consumers have already made up their minds about pricing models and value propositions for various data access plans. For example:

  • Dial-up plans are worth between about $10 - $20/month
  • Broadband plans are worth about $20 - $40/month
  • Wireless broadband plans are worth about $40 - $80/month

All of them should be unlimited in a consumer's eyes. Now, that doesn't mean that vendors have to offer plans that follow those pricing models - but until they do, they won't see the tidal rush of consumers that translate into giant growth and huge profits.

What do you think, will consumers give in and settle for paying outrageous monthly access fees for the convenience of wireless data connections, or will the wireless service providers have to meet the market demand and deliver unlimited broadband connections for reasonable prices? Let's hear your feedback in the forums.

About

Donovan Colbert has over 16 years of experience in the IT Industry. He's worked in help-desk, enterprise software support, systems administration and engineering, IT management, and is a regular contributor for TechRepublic. Currently, his profession...

27 comments
father.nature
father.nature

1. I repair computers. 2. I don't track my downloads precisely, but a quick review of my Downloads folder on one machine alone shows > 4GB for the last month. I have 4 machines running daily, not counting customer's machines. 3. I'm paying $35/month for my connectivity. 4. I don't have a smartphone because the price of mobile telephony internet connectivity is ridiculous. 5. I have to carry one of my laptops anyhow, so I pause at wireless hot spots to link to the internet if needed. It seldom is. 6. I also stay reasonably sane by remembering that all of the recent research on multi-tasking demonstrates that multi-tasking is a myth and that attempts to multi-task result in decreased personal performance on the tasks attempted. I therefore often say "no," and "I'll get back to you on that by ***** ." and thereby appropriately finish one task before starting the next. 7. This is also how one trains small children - some folks need to learn or re-learn that instant gratification is not always possible or likely. Timely consideration, yes; instant, no. 8. I flatly refuse to be soaked to facilitate and perpetuate a myth and to contribute to the infantalization of others. I am also not so greedy that I fear their howls. Those howling are a distinct, if loud, minority and usually turn out to be money-losers in the long run. They want quick-quick-quick and their hands held right up to payment time, which is slow-slow-slow as they abruptly disappear. Works that way with little kids, too - if you let them. 9. Yes, I'm a Verizon customer. Sorry, Ivan - get real and you might get more of my business.

Wd40dry
Wd40dry

We used to have Road Runner in Coeur d' Alene, Idaho, and had unlimited broadband. I could easily keep up with all my online activites, watch Netflex movies, documentaries and was not limited in any way. After moving to Sandpoint, Idaho, I was horrified that Road Runner didn't come out this far and after a terrible experience with Blue Sky, we switched to HughesNet only to find the same unacceptable conditions and limits as Blue Sky. We basically cannot read email without going into a html version without color or normal features (Gmail) with this stark outlook, it is then impossible to download Youtube must less watch anything decent. You can order pizza and still wait on pages drawing long after delivery. At 11 p.m. PST we finally get into free download time until 3 am. These times are based on EST. It is difficult to get through the day and night awaiting a time we can get some decent bandwidth. This must and will be resolved soon. Road Runner cost $29 mo. and HughesNet $79. We out of necessity are paying double and getting far, far, far less. I am considering alternatives. If anyone has an idea, please do share it! Thanks! I may have to launch my own free bandwidth satellite. It would be easier than dealing with these unfriendly services. xoxox

darrylhadfield
darrylhadfield

There are three items to take into account, when dealing with cellular as as landline/wired network replacement: Peak/Average speed, latency, and bandwidth. All I'm seeing are people complaining about the third. Honestly? Having seen Verizon's 4g, AT&T's 3.5g ("4g"), and Sprint's 4g.. none of them really compete with a landline (I see at least 10mb/s on my Time Warner circuit, bursting up to 27mbps occasionally). Even before that, however, latency is a deal-breaker. when I have to deal with 200ms+ latency on a cell phone connection? Sorry, but I'll keep my landline. $50 a month for 2.5gigs... Verizon's smoking crack.

bdwakefield
bdwakefield

There is no way that a cellular based data plan would work for me. My wife and I stream netflix DAILY. Current results for Feb? 154,462 MB of traffic. = ~150 GB Netflix streaming, downloading free lectures from MIT, eBooks, audiobooks, mp3s, hulu, pandora, Last.FM, Linux ISOs, MSDN subscription software, Shopping, gaming, XBOX Live... in addition to email and facebook, etc. 5 GB of traffic cap with $10 per GB over, my internet bill would be $60 + $1450 in overage charges. Verizon, you have to be kidding yourself if you think I would ever give up my $50/month 15mbps (peeks at 20 sometimes!) cable internet connection for your wireless service. Even with 4G/LTE speeds.

oldbaritone
oldbaritone

I'm sure that part of the problem is the sheer volume of data facing wireless ISPs. While it's nice to say that "5GB isn't enough", when the carrier starts multiplying the number of subscribers times their desired data transmissions, and matching it against the entire available bandwidth of their system, there just isn't enough to go around. Wired ISPs can just increase their data rates because their existing fiber infrastructure can support it with minor hardware changes at the head-ends. Fiber has HUGE bandwidth. Over-the-air is severely limited. Cable providers are free to re-allocate signal bandwidth for data transmission, simply by deleting an analog channel from their offerings. They're considered a "closed" system, so they can do almost anything, as long as the signals remain contained within their system. Not so for wireless systems. They are subject to bandwidth and usage allocations set by regulatory agencies out of their control. They must conform to signal standards and methods established for their industry. And while they may be able to upgrade some behind-the-scenes equipment, anything they do must be compatible with all of their subscribers as well. (Does anyone else still have a "bag phone" - even though it doesn't work any more? Yeah, I should throw it out, but I haven't.) So "bottom line" - what's the status of the peak demand in peak service areas at peak times for the carriers? I have a feeling that it has already pushed past 100% of available bandwidth - WITH the current 5GB limit. They're trying to add sites, but it's a cumbersome process. The wired provider can just begin connecting new equipment to their old network, using previously-unavailable allocations and methods, and roll it out over time. It's not that easy for the wireless providers. There's no argument that many users probably need more bandwidth. But until there are new means and methods to transmit data wirelessly, the wireless providers may not be able to provide it. And if they can, it's probably going to continue to cost extra.

RochSkelton
RochSkelton

I certainly agree that "wired" (copper and fiber) beats wireless, but there isn't always a choice. MANY rural areas of this country do not have fiber or cable or DSL broadband options. For them, its satellite or wireless cellular. Having spent time in some of these "outskirts of the connected society", I can tell you that WiMAX or LTE or whatever else comes around with 4G and later will be a very welcome upgrade. UNLESS the data transfer limitations and charges mentioned in this article kill the usefulness. (anyone think the US government will subsidize the rates for rural users to ensure equal connectivity options compared to the "lucky" users with wired options?)

hineses@hotmail.com
hineses@hotmail.com

I've used my DD-WRT flashed WRT-54GL for years to log/review usage. I'm typically around 260Gb/month at a minimum. I've scoffed at the "Unlimited"/5Gb wireless plans from the beginning. I've been upset with my wireless carrier since they tricked me (my fault, I know) into upgrading to the unlimited texting plan which charged me $0.25/Mb data rates instead of online minutes for data. It was a $250 blunder. I also love the way the wireless carriers are forcing people to get wireless data plans for phones with touch screens, just $10 for 25 Mb, yes that's an "M". Just enough to get you to create huge overages. I estimated that would allow my daughter with her touchscreen phone to login to facebook exactly 5 times a month, without viewing any pages other than her home page. I threatened to throw away her phone if she actually used it for data. I'm almost longing for the days of the Ma-Bell monopoly and dialup networking...

Slayer_
Slayer_

That sucks. I just got to shaw.ca, login, and click the usage button, it shows my usage for the month. I am pretty much right on my limit each month, about 65gb of the 60gb limit. My buddy has the extreme, fastest he can get, cause of the bandwidth restrictions, he downloads/uploads about 500gb a month. My Folks, who watch Netflix all the time, use about 40gb a month.

l_creech
l_creech

May be good for a companies bottom line, but they are not good for consumers. I've used DD-WRT firmware in my various routers for sometime to monitor my bandwidth. I grant I'm quite probably an exception to the rules in a lot of areas, I don't stream movies or music; I do download and upload ISO images on a regular basis though. My home office used 192GB in January, and I'm sitting at 181GB as of this morning for February. My mobile usage can get right up there to as I'm prone to downloading ISOs and other items on it as well, I also stream Pandora on my phone about 16 hours a day. The highest usage I've seen on that was December at 190GB. Sprint probably hates me, but I pay $140 including taxes and smart phone (Epic 4G) penalty for Simply Everything Unlimited, and I have no intention of changing my plan to a lessor one.

golden.kenneth
golden.kenneth

I'm 1/4 mile outside city limits and can take my selection of dial-up, wireless broadband (from a local carrier) or cell wireless... I'm tired of shelling out $60 a month for internet with my wireless broadband for less bandwidth than DSL provides but what choice do I really have? Telco won't replace the lines to the house (6 year old house mind you) and cable won't run lines to us and all because they all have to bore under a small creek that runs when it rains.

smoothjazztampa
smoothjazztampa

I don't care what anyone says, data is more secure and less susceptible to packet & data loss over wireless any day.. Any simple solution says follow the money and if the isp can find a way to rip you off via collusion (pricing with each other) or any other means, THEY WILL. Follow the money.. Virgin was simply a 3g reseller and got caught with their pants down.. Now they are trying to cram more customers into the same bandwidth and profit from it.. BTW my son used 16 GB of transfer on his iphone last month. I used less than 1 GB.. unusual for me.. I usually go over the 5 GB cap. ( I'm also grandfathered on the unlimited AT&T plan).. AT&T took some communist tactics right out of the Marxist playbook and used the term "bad for the collective" when "bandwidth hogs" were taxing the crammed system. When in all actuality it was AT&T's fault for not investing in infrastructure to accommodate the additional bandwidth. Instead they chastised heavy users. This was on their FACEBOOK page. They also had AT&T workers posing as customers on FACEBOOK bullying people who did not agree with the AT&T party line. It was a bad scene..

dcolbert
dcolbert

That my "high" consumption is because my daughter actually does a pretty good deal of YouTube watching. She also visits high bandwidth flash content sites that deliver streaming videos and games (Cartoon Network, Nick). But if one tween girl who doesn't spend *that* much time on her PC can do that much damage to a bandwidth cap, I can't imagine what it would be like for the parents of a couple teen girls, or the college student who spends his life on Facebook, streaming video, and downloading large torrents. 2.5GB or 5GB of data would have been enough of a cap in the 90s, maybe, but Verizon and the other wireless carriers are out of touch if they think that wireless will ever be able to deliver a satisfying broadband experience today, and the capacity limits and prices they want to impose on end users.

charleyj98
charleyj98

I knew there was some reason why I was so leery of the wireless offerings. You have now clarified it for me. Thank you, thank you, thank you!

dcolbert
dcolbert

I had to reset the counter limit from 5GB to 10GB. I just hit that limit - and the month still isn't done. The Wireless carriers are nuts if they think they're going to get people to cut the cord when 2.5GB costs $50 a month.

dcolbert
dcolbert

I think those kind of challenges can be overcome. Cable has become the most popular broadband delivery service in the US, despite the fact that it is a shared pipe. Remember the Telcos and their dire warnings about how we would come to a crawl during peak use (and sometimes, we do...) In my experience, frequently the site you are connecting to is now the bottle-neck. Streaming video is the exception, but the truth is that streaming video may just be too expensive of a way to deliver content. Look at the "success" of satellite radio. It isn't that people aren't interested in the programming or the benefits - it is that the model means they can't deliver it at a price that makes sense. I'd spend $19.99 a YEAR for streaming radio content. They want that a month. Ain't gonna happen. But maybe they can't actually DO that. I understand those satellite thingies are expensive. If that *is* the case, then they've got a business model that doesn't work and won't compete with traditional radio. The same thing goes for pervasive Wireless Internet. Unless they can deliver it profitably and competitively with cable and fiber solutions - they might as well not waste their time. They'll continue to provide limited travelling Internet to those who can afford it, frequently on machines that are not quite as robust. I can understand why they want to be on main-stream rather than on the outskirts for the gold-rush of data consumption that is coming. I just don't see that their direction is putting them anywhere but out in the suburbs - in an expensive, gated community on a golf coourse for sure, but still, not where the real action is taking place. And let me add, I'd like to change my Must Buy recommendation for the Virgin MiFi 2200 to a Do Not Buy. The 5gb cap was annoying enough - but raising the price $10 and cutting the bandwidth by half reeks of a bait and switch. These are the kind of activities that are going to eventually result in class action lawsuits and increased regulation and oversight of the wireless telcom industry.

dogknees
dogknees

Until they can provide a minimum bandwidth to all users at the same time, the whole thing is a waste of time for me. My standard would be to be able to watch 1080p video with no dropped frames. That is everyone watching a different 1080p video simultaneously. Perhaps 100,000 users in a small city. Until the providers can do this, I'm not really interested in any of their offerings, and it certainly won't replace cable/landline connections.

HAL 9000
HAL 9000

While the Data Transfers may be fine at the moment for Wireless Devices even on the newly announced 4G Network if you can get it, the more users on this network or the further you are from a Tower the slower the Connection speed will be. There is a Limit to what the WiFi Connections can distribute and this is a Physical Limit that can not be overcome unless you start placing a Tower in every house in the street and several in each Business Position. This isn't going to happen and nor should it be expected to happen. Anyone who believes that Wireless will replace Wired is in Ga Ga Land and believes that the Laws of Physics don't exist or can be broken when it suits their need. What appears to work well with very few users is hopeless for the Total Community. What they are suggesting by claiming that WiFi will take over the Data Distribution network is like suggesting running a Single Core Optical Fiber between major cities. Sure it will work and it will carry what is required as a Base Line but it will become hopelessly Overloaded when you try to push everything through it. Col

dcolbert
dcolbert

MiFi through one of the Wireless carriers is probably your best alternative. The truth is that if there is ANY model that has severely limited appeal it is Satellite Internet. It simply costs far too much to deliver and has too many liabilities holding it back.

dcolbert
dcolbert

Two measures in one term... Raw speed, and capacity of data that can be transferred through the pipe in a given duration of time. Both are important, and it is arguable that Virgin's initial release of the MiFi illustrated the point. When first released on the Virgin brand, the 2200 MiFi promised "unlimited* bandwidth for $40 a month. But the peak bandwidth SPEED many people were seeing would not allow you to consume 5GB in a single month, even if you TRIED. Provided that your first two are there... speed and latency, then I can hit bandwidth CAPS that are put in place, and that becomes the point where the Wireless carriers lose my business.

dcolbert
dcolbert

If they can't compete, they've got a broken, and likely doomed business model. The WHY of it doesn't matter to the consumers. If the wireless carriers can't compete on price *and* features (including unlimited caps), then the CEOs are disconnected from reality when they suggest that people will be cutting the cord in record numbers. Sounds like wishful thinking, not sound business strategy, to me.

dcolbert
dcolbert

There are all kinds of issues with isolating rural users from the same kind of connectivity to broadband that urban users have. Just imagine, those in the cities have better access to services and information already, arguably. These urban hubs tend to be politically *blue*, as well. Out in the "redder" suburbs and typically very red rural areas, you're cutting them off from the same ability to access data and information. I mean, they can GET it, but it is going to cost them dearly compared to someone doing research on an issue in the urban core. Hadn't really thought of it from this perspective - but that doesn't seem fair.

dcolbert
dcolbert

"I'm almost longing for the days of the Ma-Bell monopoly and dialup networking... ." Exactly. At least they treated you pretty well when they shook you down in the old days and gave you a phone that sounded good and you could kill an intruder with.

dcolbert
dcolbert

to think that this is somehow possible. They have suburban and rural users who are without options because our broadband buildout in the US is an embarassment compared to other nations. Those suburban and rural users who have no options give them the raw numbers that indicate, "a good deal of people ARE cutting the cord". But they're not doing it by choice, it is necessity. In the urban cores where the largest groups of people are, there is no way that people are going to give up wired for wireless connections when the terms are so poor. Actually, in urban cores when there are multiple free or nearly free solutions, wireless becomes LESS attractive. If I were still living in a high density urban area, I'd be far less concerned about mobile broadband solutions. An open WiFi was as close as the next Starbucks or McDonald's, which was every other corner. I think the wireless carriers have misinterpreted their numbers.

HAL 9000
HAL 9000

My Cable Company has just increased the Unlimited Plan I'm on from 50 GIG to 1 TB. When on 50 GIG I would always be over the limit by no latter than the 20th and most time long before that. Now I'm flat out hitting 100 GIG by the end of the month and at the newly rated 100 MBS everything is fast and great. If they could get WiFi to work at the slow 20 MBS and be reasonably priced I still wouldn't be all that interested. Just way too slow and unreliable in comparison to Optical Fiber to the End User. ;) Col

milt
milt

I bought a Virgin Mobile MiFi 2200 a month ago because the package offered "unlimited" WiFi for $40/month and I was about to go on a long trip where I needed pretty constant e-mail access. Then I was hit with their bait-and-switch of raising the price to $50/mo for 2.5 GB, which really annoyed me. After three weeks of usage I had only consumed about 1 GB (I didn't buy it to watch videos or such), so I could accept their price increase if they were to slow my access down to the 256 kB rate specified in their terms of agreement. BUT ... and here's the big BUT. Almost half the time, and in strong Sprint service areas, I had no service at all from Virgin Mobile. Sometimes it would trickle through a few kB a second, and often I would get no data at all, and the system would default me to the Virgin Mobile login page generated by the MiFi 2200. So, if I can't get reliable service when I am far below their monthly limit, the device becomes a piece of junk. And it certainly is no replacement for a wired internet connection, at any price. I'm wondering if the higher-priced Verizon version of the MiFi 2200 gives better performance.

dcolbert
dcolbert

Is a troubling direction. Comcast? My cable provider doesn't have an official policy on tiered use as of yet. I guess the question is, "Should network broadband connectivity be a utility commodity paid for by volume like electricity or natural gas?" It COSTS the natural gas company or the electric company to produce every kWh of energy you consume. Arguably, once the infrastructure is produced, the bandwidth pipe doesn't continue to COST - not like the production of other metered utility resources.

dcolbert
dcolbert

And it is hit and miss with both. Several times I've had to use my Virgin where the office Verizon MiFi was crawling. Often I've used the Verizon device where the Virgin simply didn't have a signal. Verizon has the edge, for sure - if you'll commit to a 2 year contract at a minimum price per month. It depends on what and how you plan on using the device for.

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