Thoughts on Data Throttling And Value

by Christopher Paul on March 5, 2012

From SplatF:

Dan Frommer argues that if you’re complaining about throttling you’re the reason why carriers throttle.

“Here’s the big picture bottom line: If you use a lot of data, you are clearly getting some sort of value out of it. Value isn’t free. The world’s finite resources simply aren’t trending toward free. That isn’t logical. I predict most of you will be spending significantly more per month for wireless data in 5 and 10 years than you do today. You’ll be getting faster and better service, and more value out of it, but it won’t be cheaper.”

But price and value are very different things. And I think the issue people had with the throttling of unlimited data plans is that AT&T was not clear on when it would kick in – at least until recently. Dan admits that the company could have communicated better. And compared to the usage based plans, your options weren’t as valuable – even if you weren’t a super heavy user (which is up for debate, if you ask me). That, I feel, is why there was such an uproar.

Before you had a $30 unlimited option only. Then, you had a miserable $15 plan or a $25 2GB plan; if you went over, you’d be faced with an overage fee. For someone like me who used between 1.6 and 2.4 GB a month, I didn’t see the value in switching to the lower priced plan because the extra $5 was the premium I paid on peace of mind. When my data was throttled because I was ‘top user’ – still undefined and not easily verified – it felt unjust because the premium wasn’t worth it anymore. In fact, the value was worse because the situation proposed I go to a plan that cost me a lot more money on months I went over by a small amount or subject myself to undefined bandwidth castrations as if on a whim.

Today, however, things are different. And AT&T is finally doing something to address the value discrepancies that existed before. They’ve defined at what point data will be throttled – 3GB – and they’ve made the cost of a 3GB plan equally priced to the unlimited plan. So the value is on par to what is reasonable and fair. Regardless of your plan, you still get 3GB for $30 and what happens after the 3GB depends on whether you’re willing to pay in time/speed or money.

Oh, and to make things more valuable, they’ve kept the 2GB plan at $25 so if you are an average user, you probably won’t get hit with extra fees. And if you are a heavy user, you can go up to 5GB and get tethering included. That, to me, is value. Tethering is pretty damn cool and I use iPhone tethering for work every day (its the nature of my job). And I’m confident I’ll never go over 5GB but it would be useful for my wife and I to have data for our iPads and laptops if we wanted to.

Anyway, the point of all this is to remind people that price and value are very different. They are closely correlated but one does not cause the other. However, before the recent clarification and updated plans, AT&Ts usage based data tiers were not valuable to many people. Changing the value proposition is what caused people to et upset. And by bringing usage based plans in line with a managed unlimited plan, the value became closer and less people are likely to complain when they are throttled.

But will concede this point, though: threatening legal action isn’t going to help or make the situation change. Unless there is real competition in the wireless space, unlimited plans aren’t coming back for a while (if at all).

Lastly, I don’t think prices are doing to go up, though. At least, not so quickly (they may move with inflation in a ladder, though). But relative to what you get, the cost will go down. I think its inevitable as WiFi and other carriers compete for trafficking data.

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