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Friday, February 29, 2008

Verizon Wireless - $40 for 50MB... are they joking?

Sometimes, the differences between national pricing for the exact same services staggers me.

In the US, Verizon Wireless has just revamped its mobile data plans. It now has two - on at $40, and one at $60. Fair enough, you might think. Except that the $60 plan has 100x the bandwidth cap of the $40 one - 5GB vs 50MB.

This compares to the now-standard UK rates of $20 for 1GB, and $30 for 3GB per month with 3G modems, or about $15 for pseudo-flatrate data (typically in the 100's of MB at least) on handsets.

In other words, rather than going for small / medium / large, Verizon has decided to segment its customer base between just "occasional" and "lots" (ie business user). It appears absolutely uninterested in the massmarket consumer mobile broadband market that seems to be blazing a trail across Europe.

4 comments:

Carlo Longino said...

I've been hoping US operators would take notice of what's going on in this space in the UK and elsewhere. I pay $60 per month to Sprint for unlimited use of an EV-DO USB dongle. I love the service, but don't really use it enough to justify the cost. They, too, offer a $40 plan -- but it gives you 40 MB and they charge $.001/KB for overage (though they won't charge you more than $99.99 per month). The other option is to pay 3 cents per KB outright.

Casual/occasional/non-business use doesn't seem to be anywhere near their radars yet.

Edsard said...

Hi All,

We did a trial, sponsored by the GSM and Microsoft, with 13 Mobile Operators last year in Europe, Asia and even an MNO in Africa - (300) Mass Market End-Users.

These were given an Edge Enabled notebook for a period of 3 months.
Notebook, SIM and Subscription were all free for the entire period. And there was no limitation on use!

One might expect mass of data traffic because of this unlimited use. Well surprisingly this was not the case at all. During the trial, Diginext provided reporting based on actual usage - We were totally surprised by the results ourselves.

Allthough there were slight differences per countries (<5%) The average use was never more then 700MB per month. >60% was just surfing the internet (in certain countries 90%). And most used some form of messaging like MSN or Yahoo, which did not use a lot of data. Yes, of course there was the intermitent "freak" that needed to use 3 Gigs worth of Shareaza while on an Edge network.

But this was well compensated by the vast majority of low use - under 500 MB per month.

The results have been published by the way at GSMWorld Read the Research report.
Very interesting results!

My point with this data?
Well either Mobile Operators are out of touch with the End-Users or they know full well that they are doing with these models.

You will always choose the more expensive plan even if you never reach that amount, just because the difference is so small.
What would you have done of the 40 would have been for 1 Gig?

I would have gone for the 40 because i know that i will never use more. The same is going on with ADSL and cable today.

Another point:

I know 50MB seems like very little. But did you know that for messaging you typically never go beyond 30MB in a month?

Why do operators not offer a "Browsing and Messaging only subscription", where on the network they block all other traffic and charge 25 USD a month?

Is it because they are out of touch (don't have this data) or it is because they would rather charge the high amount and defend (still) with the "Too low will result in too much traffic cost" excuse?

What you you think?

Regs,

Edsard

Dean Bubley said...

Hi Edsard

Interesting comments.

Would be interesting to see the difference in behaviour between EDGE and HSPA, though.

For 2.75G it doesn't surprise me that usage was relatively low. Apart from anything else, many operators don't have EDGE anyway, or only deployed in some areas, so that would put usage back down to GPRS speeds.

HSDPA is probably the first 3GSM wireless generation that can be genuinely usable as a low-tier ADSL/cable replacement as a primary broadband line. I would think that for such users with a mix of web, video, messaging, downloads etc, 1-3GB is pretty common.

Other users such as myself use it as a secondary broadband line in addition to ADSL. My usage is probably about 1GB per month, and much of that is streamed music, with the rest browsing & messaging.

I think that Verizon would probably have done better with $40 for 500MB, $60 for 3GB, or perhaps a 3-tier offer with $20 for 50MB. I'm sure they gave it a lot of thought - I just think they're missing a trick.

I don't think "browsing and messaging" only can work - how do you define browsing? Does it include anything in a browser, including video etc? What about mashups & Web 2.0? Am I "browsing" Facebook or interacting with it as a "service"? How would you explain that to users?

edsard said...

Its a bit difficult to read on this blog. But here is the data of 70 users in Feb of this year.

Forgive the "household" analytics but:

What you will see is that the bearer actually does not influence the usage pattern that much.

Bearer Connections Percent Users
3G 558 39.97% 69
WLAN 250 17.91% 17
2G 244 17.48% 43
LAN 231 16.55% 39
EDGE 74 5.3% 12
CSD 39 2.79% 6

Total 1396 100% 102

As for the browsing only, I would call it "Surf the Web" or something to convey the essence.

Any application End-User would start and/or use that goes beyond port 80 (variants of 80), I would let the Connection Manager or some sort of "guardian" warn the user that this is not possible, while on this subscription. Would also let this tool tell them to use the alternatives for this such other services. Offer WLAN or LAN, etc...

By the way, not many Operators in Europe have EDGE. But there is a big world out there and in the rest of this world, like Asia, Edge is actually very popular.
Which is not surprising if you look at the relative cost of deplyment of Edge vs 3G.

I agree with you that I too use about 1 Gig a month. In fact just got a roaming bill from VF at !#@%$# 800 euro's! for using it in Feb - during MWC. Ouch ouch ouch!

But my point here is that people like you and I are far from average users. We ARE the early adopters that spend 75 Euro a month on wireless or other gadgetery. That is also what happened in the DSL days. Average Joe (where the volume is) (a) does not want to spend this amount and (b) would rather use ITunes and streaming on his PC.

Data does not lie. People (on average) just use laptops for browsing, regardless of the speed of the technology IMHO.

Also, I think today it is certainly a secondary services to the existing ADSL market. A sort of Add-on. That is also what i think it should be marketed as. In fact in Hong Kong, as you know, PCCW offers a nice plan via Netvigator (their ISP) where you get an HSPA Subscription and modem if you have the expensive DSL Subscription. There its really an add-on. The same is happening here in the netherlands with XS4ALL (ISP owned by KPN).

Here are some stats of Feb 08:

Application Data generated Percent Users Average data/user

IEXPLORE.EXE 3.46 GBytes 26.28% 69 51 MBytes
FIREFOX.EXE 2.34 GBytes 17.78% 28 86 MBytes
ashWebSv.exe 2.24 GBytes 16.97% 9 254 MBytes
OUTLOOK.EXE 1014 MBytes 7.51% 21 48 MBytes
emule.exe 985 MBytes 7.3% 4 246 MBytes
express.exe 418 MBytes 3.1% 1 418 MBytes
Rtvscan.exe 360 MBytes 2.67% 1 360 MBytes
IQonn.exe 344 MBytes 2.55% 90 3.82 MBytes
vlc.exe 230 MBytes 1.71% 2 115 MBytes
Other 1.86 GBytes 14.14% 17 112 MBytes
Total 13.18 GBytes 100% 96 140.56 MBytes
iexplore.exe 1.61 GBytes 32.25% 49 34 MBytes
emule.exe 958 MBytes 18.77% 3 319 MBytes
firefox.exe 611 MBytes 11.96% 21 29 MBytes
ashWebSv.exe 454 MBytes 8.9% 7 65 MBytes
OUTLOOK.EXE 302 MBytes 5.91% 17 18 MBytes
IQonn.exe 237 MBytes 4.65% 63 3.77 MBytes
ccProxy.exe 127 MBytes 2.49% 2 64 MBytes
vlc.exe 115 MBytes 2.25% 1 115 MBytes
Rtvscan.exe 104 MBytes 2.04% 1 104 MBytes
ccApp.exe 100 MBytes 1.96% 2 50 MBytes
AdobeUpdater.exe 64 MBytes 1.25% 6 11 MBytes
flashget.exe 55 MBytes 1.08% 1 55 MBytes
thunderbird.exe 54 MBytes 1.06% 6 9.05 MBytes
Opera.exe 34 MBytes 0.67% 3 11 MBytes
nsl_host_process.exe 32 MBytes 0.63% 1 32 MBytes
orbitdm.exe 28 MBytes 0.55% 1 28 MBytes
Skype.exe 21 MBytes 0.42% 9 2.36 MBytes
SecureCRT.EXE 21 MBytes 0.41% 2 10 MBytes
update.exe 18 MBytes 0.35% 7 2.52 MBytes
ashMaiSv.exe 16 MBytes 0.31% 5 3.2 MBytes
mstsc.exe 14 MBytes 0.27% 3 4.66 MBytes
msiexec.exe 11 MBytes 0.22% 3 3.74 MBytes
K-Meleon.exe 8.79 MBytes 0.17% 1 8.79 MBytes
MapCalibrator.exe 7.85 MBytes 0.15% 1 7.85 MBytes
msimn.exe 7.34 MBytes 0.14% 8 940 KBytes
ICQ.exe 4.6 MBytes 0.09% 1 4.6 MBytes
UpdClient.exe 4.52 MBytes 0.09% 4 1.13 MBytes
fdm.exe 4.46 MBytes 0.09% 1 4.46 MBytes
Explorer.EXE 3.98 MBytes 0.08% 12 340 KBytes
Other 40 MBytes 0.79% 6 6.72 MBytes

Total Appls 4.99 GBytes 100% 70 72.93 MBytes

Port Data generated Percent Users Average data/user

80(HTTP) 2.58 GBytes 51.84% 63 42 MBytes
443(SSL) 409 MBytes 8.01% 63 6.49 MBytes
0 307 MBytes 6.01% 46 6.67 MBytes
22680 283 MBytes 5.54% 1 283 MBytes
12080 222 MBytes 4.35% 4 56 MBytes
26347 216 MBytes 4.23% 1 216 MBytes
110(POP3) 158 MBytes 3.09% 17 9.27 MBytes
4662 130 MBytes 2.55% 5 26 MBytes
8000 112 MBytes 2.2% 2 56 MBytes
2967 104 MBytes 2.04% 1 104 MBytes
27505 75 MBytes 1.47% 1 75 MBytes
37589 48 MBytes 0.94% 1 48 MBytes
25(SMTP) 36 MBytes 0.71% 10 3.64 MBytes
85 26 MBytes 0.5% 2 13 MBytes
22 21 MBytes 0.41% 2 10 MBytes
45878 17 MBytes 0.34% 1 17 MBytes
4124 17 MBytes 0.33% 1 17 MBytes
143(IMAP) 16 MBytes 0.3% 3 5.18 MBytes
3389 14 MBytes 0.27% 4 3.5 MBytes
554 14 MBytes 0.27% 2 6.93 MBytes
2000 14 MBytes 0.27% 2 6.81 MBytes
50002 10 MBytes 0.2% 1 10 MBytes
12254 9.72 MBytes 0.19% 1 9.72 MBytes
46143 8.84 MBytes 0.17% 1 8.84 MBytes
26197 8.71 MBytes 0.17% 1 8.71 MBytes
28566 8.6 MBytes 0.17% 1 8.6 MBytes
20506 8.56 MBytes 0.17% 1 8.56 MBytes
19078 8.26 MBytes 0.16% 1 8.26 MBytes
12110 7.9 MBytes 0.15% 3 2.63 MBytes
Other 151 MBytes 2.96% 9 17 MBytes

Total Ports 4.99 GBytes 100% 70 72.93 MBytes