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Verizon Charging You More, As Bandwidth Costs Them Less.

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http://www.techdirt.com/blog/wireless/articles/20130123/12010721767/verizon-charging-you-more-as-ban...

As we just recently discussed, broadband providers appear to finally be willing to give up their pretend need for data caps due to the pretend costs of delivering service. The story they told essentially was that, without data caps, congestion would clog the interwebz tubes and that laying bigger tubes was way too costly. Perhaps noteably, this rarely resulted in actual hard caps on data, but rather provided a convenient excuse to charge more for more data service, regardless of the effect or cost of delivering that service.

Now Verizon's 4G LTE money-making machine is giving us a glimpse into exactly how profitable providing bandwidth is becoming as the cost for delivering service drops and prices to consumers go up.

Verizon (VZ) posted a pretty impressive holiday quarter (one-time charges aside) with a good outlook on Tuesday, and the company’s share price rose as a result. There were also plenty of interesting takeaways from the carrier’s earnings call, but The New York Times’ Brian X. Chen zeroed in on one item of particular interest. Verizon launched new “Share Everything” plans last summer that make smartphone data more expensive for many users. The best thing about these plans for investors — and, not coincidentally, the worst thing about the plans for subscribers — is that Verizon is now making more money off of smartphone data as costs associated with transmitted that data are falling.

It really doesn't get much simpler than that. The 4G LTE network is efficient to the point that delivering the service costs less than the 3G network, yet the price to consumers is going up. To be clear, the problem here isn't that Verizon is making money. Rather, the problem is that this comes from the same company that built a business model around low caps and high overage costs while also claiming that caps were the sign of a "competitive market." For those of you playing along at home, it's precisely because of a lack of competition that Verizon can at once have its costs drop while raising prices on its services. Were there more competition, someone new would compete on price or value of service. As it stands, Verizon can use their faster service and low caps to further the aforementioned business model.

As an added bonus, Chen noted that Verizon's faster data networks also cause users to eat through their data allowances more quickly. This eventually prompts them to buy more expensive plans with higher data caps, which of course net Verizon even more cash.

As a Verizon customer myself, these kinds of signs that there isn't enough competition for my dollar are quite frustrating. On top of that, the model is specifically designed to provide a great service and then drop a bunch of obstacles in its path... it's maddening.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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That article is so full of FUD it's not even funny. Trust me if everyone had unlimited data within a day ther woud be complaints about the slow or non-existant service. Data caps will go up when Verizon has the bandwidth. Until then one can go to another provider or wait. Unless one doesn't have access to wi-fi it doesn't really matter. I think I've used 300 MB this month and today is my last day of the billing cycle.

anyway

https://community.verizonwireless.com/message/929780#929780

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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Another reason this doesn'tt mean a whole lot is because if the cost per MB goes down, it doesn't mean Verizon's costs will go down.

If Verizon's cost per MB gets cut in half because of the 4G network but consumers use 4 times the amount of data because speeds are faster, then Verizon's cost for the data they provide WILL double. But, hey, it's ok because the price per MB has decreased!

Additionally, even though the 4G network is less expensive to run, they STILL have to maintain the older networks, but, hey, it's ok because the cost of data per MB has decreased on the 4G network. Doesn't matter that the cost of running the ENTIRE network infrastructure has increased by adding ANOTHER layer of technology to service.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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Somehow I think you are ***  with only using 300MB of data in an entire month if you are a HomeFusion customer. I'm taking it that you are not and that your data usage is so low at 300MB in a month because most of the time you are sponging off a WiFi connection that someone else has to pay for.

Data capping has NEVER been about controlling congestion. People that keep running that BS disinfo flag are either corporate hacks or stock holders that wish to protect their jobs or increase their stock value.

If congestion was really the issue, then use QoS metrics at the times when congestion is detected and balance out the bandwidth for everyone that's using a specific 4G/LTE tower. But they won't do that, because it's never been about congestion bringing down their networks. It's about monetizing data usage. In the end it's about screwing people out of money and most of all, control. 

Message was edited by: Verizon Moderator

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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<< Personal attack removed to comply with >>

Verizon could raise their data caps to a bare minimum of 60GB and a max of 100GB per month without raising their prices and they would still make a hefty profit. They could charge $1 per GB over the data allowance and they would still make money..

The scare tactics of there being congestion and the costs of maintaining the infrastructure is nothing more than propaganda to keep the dumbed down masses worried about using too much data and to keep the stock holders happy.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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TexasRebel wrote:

Somehow I think you are *** with only using 300MB of data in an entire month if you are a HomeFusion customer. I'm taking it that you are not and that your data usage is so low at 300MB in a month because most of the time you are sponging off a WiFi connection that someone else has to pay for.

Data capping has NEVER been about controlling congestion. People that keep running that ** disinfo flag are either corporate hacks or stock holders that wish to protect their jobs or increase their stock value.

If congestion was really the issue, then use QoS metrics at the times when congestion is detected and balance out the bandwidth for everyone that's using a specific 4G/LTE tower. But they won't do that, because it's never been about congestion bringing down their networks. It's about monetizing data usage. In the end it's about screwing people out of money and most of all, control. 

A) Where did I say I was a HomeFusion customer? Please quote me. I'm waiting. I'm talking about my PHONE data usage.

B) No I don't have to sponge wi-fi I have a 30 Mbps cable internet connection that gives me 250 GB a month.

C) As far as the rest read the link I posted. You clearly do not understand anything about the technology involved.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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TexasRebel wrote:

Verizon could raise their data caps to a bare minimum of 60GB and a max of 100GB per month without raising their prices and they would still make a hefty profit. They could charge $1 per GB over the data allowance and they would still make money..

And the network would come to a screeching halt. As long as HomeFusion and cellphone data are on the same frequencies you're not going to see caps that high. Now if Verion wins some of that OTA spectrum and use that exclusively for HomeFusion then sure. That's about 3 years away. And/or they could refarm their 3G spectrum for HomeFusion. That's 8 years away.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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I am a HomeFusion user and it's the ONLY product I use from Verizon because it's the fastest technology in my area. If all you use is 300MB on your phone in a month then bravo to you. Apparently you never travel outside an area that can't be serviced by cable or dsl, so cellular data usage is really of no concern to you.

I read your link.. if 4G was brought down to it's knees during CES, that's because they didn't design/build it well enough for the expected/actual usage. That would be like using a single DS3 connection to your cable headend office that services thousands of households and then wondering why you're only getting dialup speeds on your 30Mbps cable connection.

I bet they didn't have 10Gbps fiber connections to all the towers in the area during CES and they felt no need to spend the millions to do the upgrade for an event that lasted only several days.. If they had then 4G/LTE bandwidth wouldn't have probably been so saturated. They built out 4G/LTE for the indigenous population and not the extra 150,000 that showed up for the CES event. 

On a side note.. I used to work for Verizon in Irving, TX from 2000 - 2007 as a Systems Admin. I still work as an IT Professional. I know plenty about bandwidth requirements for networks. It doesn't matter if it's running over a cable or wirelessly, it's all the same with data being modulated with a spectrum of frequencies to move them from point A to point B. Fiber/Cable just allows it to go further without too much degradation of signal.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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I'm out in the sticks.. raising data caps for HomeFusion isn't going to bring their network down. Verizon owns more bandwidth than ViaSat's Exede product, yet Exede has a Late Night Free Zone which they encourage subscribers to go hogwild in downloading data and it doesn't count towards their usage. Verizon could do the same thing and I seriously doubt it would cause their networks to come to a screeching halt.

Data capping has nothing to do with congestion.. It never has and never will.

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Re: Verizon Charging You More, As Bandwidth Costs Them Less.

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Maybe not in you area what about elsewhere? Verizon can't have one rule for YOU and one for everyone else. That's hardly fair.

And yes Verizon COULD have a cap free time zone at night. At least for HomeFusion. They do it for cell minutes. This is what I will agree with you on. Not sure how that helps one watch Netflix at 8 PM, but for those up late yes it would be helpful.

In the case of cable ISPs, yes capping is mostly about not losing video customers. In this case Verizon literally does not have the bandwith to support 93 million customers all having unlimited. Comcast is the largest cabe ISP and has less than 25 million customers. Did you even read the link I posted. It was about how at CES this month you couldn't even get Verizon's 4G in Vegas and in fact even 3G was only at 650 kbps because the 150,000 people at the convention were using up all the bandwidth. And you know not even half of them were Verizon customers.

Verizon has a total of 20 MHz of spectrum for 4G LTE right now 10 for upload and 10 for download. Now if you or any expert in the field can explain how one offers unlimited data over that in a city the size of say Chicago or heck even Nashville then maybe I'll change my attitude on unlimited.

I suspect you are the same TexasRebel that posts over at DSLreports.com. By the way your idea of nationalizing the cell phone companies would never work.

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