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story category Neutral Wireless Networks Will Mean Higher Prices
As SMS and voice revenues get eroded, expect a constricted pipe...
04:14PM Tuesday Oct 20 2009 by Karl Bode
tags: competition · business · hardware · Op/Ed · wireless
With the FCC poised to extend network neutrality principles to wireless services, and carriers like AT&T now allowing Skype over 3G, mobile VoIP is finally gaining traction. It will be a slow climb, suggests Gartner Research. According to Gartner, 50% of mobile voice will be VoIP end to end by 2019, and 30% of mobile voice traffic will originate via content websites that have embedded the functionality into their services. Instat research meanwhile suggests mobile voice apps will generate annual mobile VoIP revenues of $32.2 billion by 2013. What's this mean for you, the consumer? Higher wireless data prices, says Instat:
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"Currently, many high-voice usage customers are business customers," Nogee said. "These subscribers likely won’t switch to VoIP in the near-term as their business pays for their service. Still, the AT&T announcement will have long-term implications for the current U.S. cell phone billing model. If AT&T and other operators can’t charge high prices for voice, they will likely make it up by raising prices for data."
As we discussed last week, when consumers begin using the apps and devices of their choice over truly neutral networks, things start to change drastically. IM programs make SMS irrelevant, killing a huge telco cash cow. Mobile VoIP and programs like Google Voice also eventually threaten the telco voice minute pricing models, going so far as to take the dialing mechanism itself out of the hand of incumbent phone companies. How will wireless carriers respond to a loss of power as traditional "service" companies? Higher wireless data prices.

Ideally, you'd like wireless carriers competing for your business by offering lower data prices, but as the industry's collective 200% SMS price hikes of recent years indicate, it doesn't usually work out that way. Prices charged are usually completely unrelated to actual costs because, like the terrestrial broadband industry, the wireless data sector is considerably less competitive than carriers would like you to believe. With concentrated control by just a few major players and tools like long term contracts and early termination fees, it makes it easy to engage in non-price competition (and offer sub-par service) without any real penalty.

This lack of substantive competition means users can expect ever higher overages and lower caps as networks become more neutral -- even as wireless bandwidth gets more abundant and less expensive to deliver. You can expect wireless data prices to rise as the industry's biggest players counter the threat of consumer choice with the only weapon they'll have left when it's all said and done: the pipe itself.

Related:
  1. Verizon App Store To Block Bandwidth-Intensive Apps
  2. Google Voice Ban Is Clear Network Neutrality Violation
  3. What Network Neutrality Is REALLY About
  4. Verizon Will Either Cancel Or Constrict Pre Launch
  5. Cable Industry: Shucks, Guess Nobody Wants CableCARDs
  6. Don't Celebrate The Verizon Android Announcement Just Yet
  7. How Google Voice Could Change Everything
  8. Google To Craft Own Wireless Phone
Forums » Neutral Wireless Networks Will Mean Higher Prices
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Post a:
chronoss2009

join:2008-09-23

1 edit

You mean

corporations will make us pay more and penalize the population for wanting to slice into massive profits....

vote teksavvy CEO rocky for prime minister
vlad1000

join:2005-05-19
Brooklyn, NY

i doubt the data prices will go up

there are so many wireless internet data players lining up to compete....remember competition=lower prices!!!
and you know what my prediction is? 10 years from now...not only wireless voice will be free...wireless internet ANYWHERE will be free too

sousademiami

join:2003-02-04
Hialeah, FL

Re: i doubt the data prices will go up

Ha!
JSRoman
Premium
join:2005-03-10
Callahan, FL


2 edits
You smoking some gooooooood shitttttttttttt.

So many wireless internet data players? You basically have 4 and some smaller leeches that pay the top 4 to piggy back on their network.

--
»www.seabee.navy.mil
rahvin112

join:2002-05-24
Sandy, UT

Re: i doubt the data prices will go up

A stagnant (non-growth) market and 3 competitors or more and you will have a very competitive climate. The key here is non-growth, up until the last year or so the total number of cell phone subscribers has been growing thus giving each carrier growth regardless of pricing and service. Now that the market appears to have reached saturation with net growth of subscribers dropping below 1% the number 3 and number 4 competitors (currently sprint and T-mobile) have stopped growing and in the case of sprint are in negative growth. As a result sprint has started working on Customer service and pricing very aggressively. The unlimited everything package is now less than $100.

Once Sprint starts stealing customers from the other carriers the other carriers will be forced to compete on price and service as well. The only thing hindering competition right now is the long term contract and device restrictions. If the government came in with regulation that limited contracts to 1 year max and forced the carriers to let any compatible device on their network the competition would heat up dramatically and prices would begin to fall. If we achieve that goal pricing for cell phones would reach parity with Europe, but it's going to take some government regulation to have it happen because the carriers will prevent competion through contracts and device restrictions (forcing the purchase of a new phone to change carriers).

Once the transition to LTE takes place 3 of the top 4 carriers are on the same system and only sprint devices won't work on the other networks. I actually expect sprint to sell their cell service to the cable companies (they will go in on it together, I don't expect a single company to buy them although comcast likely could) or clearwire and exit the marketplace before 2015 as their consumer reputation stinks from years of mismanagement and a severely bungled merger with Nextel. The missing piece to the puzzle is the political willpower from the Obama administration to impose contract and device compatibility restrictions on the carriers through the FCC like Europe did more than 10 years ago that has made cellular service cheaper than a landline in most of Europe. Oh well, we can hope once the current fiasco in congress ends that the executive will become more interested in communication policy.
Kearnstd
Elf Wizard
Premium
join:2002-01-22
Mullica Hill, NJ

Re: i doubt the data prices will go up

sadly while sprint would be a good idea, Comcast looks to want to blow their cash on NBC.
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports

SHABAZZ

join:2008-07-13
Seattle, WA
I want some of what you’re smoking.
Silver_bacon

join:2009-08-03
Fairfax, IA


1 edit

Is it really possible?

I don't see how this is even considered a possibility. All the wireless companies have to do is say that data services require a $40 or more voice plan. Then they will continue to make money from voice regardless of VoIP. While some providers already do something similar to this, I don't see how they can ever lose their voice revenues if they don't want to. They still control the network and can force you to bundle voice and data.
Tigerpaw509
Premium
join:2006-07-15
Huntley, IL

Am I wrong

But doesnt Att charge $30 a month for data which I ditched for Verizon @ $10 A Month.What percent of people even have data on their plan

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA
·Cox HSI
·Speakeasy

Re: Am I wrong

said by Tigerpaw509 See Profile :

But doesnt Att charge $30 a month for data which I ditched for Verizon @ $10 A Month.What percent of people even have data on their plan
Everyone with a "smart" phone has a data plan. Every new subscriber with phones that *can* do some level of data (e.g., the LG Env's) are being forced to buy lesser data plans on top of their voice plans.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA
·Cox HSI
·Speakeasy

My SMS Has Gone Way Down...

Not claiming to be a typical phone user. Simply offering anecdotal support for the notion that IM kills SMS.

Previously, I had an LG ENV that had an AIM/Yahoo/MSN gateway. Every message sent or received on it counted against the monthly SMS quota. Between IMs and "real" SMS messages, I used a couple thousand SMSes a month. Fortunately, my employer paid for my phone.

Earlier this year, I switched to a Storm. Since then, I use less than 200 SMSes a month (well inside my plan's 250 allocation). When I want to IM someone, I use the AIM/Yahoo/MSN/Google data applications. When I want to send an SMS, I can save myself some bandwidth by sending via Google Voice. At this point, most of my SMS usage is friends sending me messages.

Data has *really* lowered the SMS usage of just this one user. Multiply me times a few thousand (or more) customers, and you got a real change in your revenue streams.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

mech1164
I'Ll Be Back

join:2001-11-19
Lodi, NJ

Not gonna happen anytime soon.

Thing is you have both wired ISP and Wireless wanting to be content providers. This way they get to take more of your change. Until congress gets their collective head out of their butt with health care (As in DON'T SCREW ME AGAIN YOU IDIOTS). You won't see any real change.

What should have been done with both of them is from the get go MAKE THEM DUMB PIPES. By letting them control the last mile and last virtual mile. We don't control what we see but what they allow us to get. I blame both sides for this. Too much money has been pedaled there get anything done.

As far as money goes. Go ahead raise the rates and watch your people flee or drop to lower plans until they can move. People are more ingenuous then corporations. They will find a work around. Just look at RIAA/MPAA Mafia. Yeah they get some but most are throwing a big middle finger at them. Cause there is always someone working to bypass them.
Forums » Neutral Wireless Networks Will Mean Higher Prices


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