T-Mobile is offering a new series of plans for new and existing customers. Starting July 24th, you can sign up for a new two-year contract where you get unlimited calling and unlimited texting. From there, you can choose a monthly allowance of data usage. If you exceed that limit, you won’t get charged more but the data will move at a slower rate. So you’ll save money but your data experience might be horrible.
This comes at a time when other wireless carriers are grappling with the idea of limiting how much of data customers are using. Verizon has moved to tiered pricing for new customers. AT&T did the same thing long ago. The CEO of Sprint recently said that his company will keep an eye on the situation and may have to abandon unlimited plans down the road.
The problem, according to Steve Schultze from Princeton’s Center for Information Technology Policy, is that the system wasn’t built for what we’re asking of it. “Our wireless bandwidth has been constricted since beginning,” he says, “And relative to the amount of data you can push through your home wired broadband, you have really a small fraction on wireless. If you think about it, just a few years ago, the primary use of data was sending text messages. Now if we’re watching video or something like that, it’s many times more and we’re not getting many times more of available bandwidth.”
So wireless providers have to figure out how to handle it. And by and large, they’ve decided to disincentivize you from using too much data. Doing that is cheaper than their other options. Susan Crawford from Cardozo Law School says, “They could add on more spectrum. That’s why AT&T says it wants to merge with T-Mobile. But that solves the problem for only a year.”
“They could build a lot more towers to add more capacity, but Wall Street hates that because it’s so expensive. So the only thing they can do is try to stem amount of data usage and the way to do that is with usage based pricing plans.”
It’s a lot easier on the networks when people use voice or text messaging. It takes up less space on the system. So the wireless carriers would much rather you use that setup rather than something like Skype that offers phone functionality but sucks up a lot more data. Of course, if people learn to use data less and less out of fear of exceeding their limit, that might lead to a lot less innovation. If customers aren’t showing up, why build things?
Also in this show, Google offers to clean up malware by asking you to do the exact same thing that caused the malware to be installed in the first place.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?