What if you had to buy gasoline for your car in the same the
way you have to buy cell-phone service nowadays?
First, you’d have to pick a gas company. You’d go in, fill out a form or answer
a bunch of questions, and then you’d have to sign an agreement to stick with
that gas company for a year, say, or else pay a $200 broken-contract fee. Once you agreed to that condition,
you’d have to pick your gas plan.
Do you want gas just locally, or for long driving trips? Gas for a sports car, a pickup, a
minivan, or a lawn mower? Want
extra quarts of oil every 2,000 miles?
You have to make all these choices in advance, and then you’ll get
billed a fixed fee, more or less, every month, at least as long as you don’t
use more than your maximum number of gallons—plus eight or ten dollars’ worth
of taxes, air-pollution recovery charges, and other government nitnoise that
nobody but the lawyers can figure out.
If you go beyond your plan’s maximum amount of gas, though, you’ll end
up paying big, maybe six bucks a gallon, for every gallon you go over. And by the way, you have to buy your
car from the gas company too—it won’t run on gas from any other company.
Sound pretty silly?
Yet if you substitute “phone company” for “gas company” it’s a fairly
accurate description of how cell phone and related wireless-network services
are sold today.
In the interests of full disclosure, I am no longer a fan of
AT&T. My childhood regard for
that firm bordered on adulation, bolstered by their support of the legendary
Bell Laboratories and reinforced by a positive experience in high school with
an Explorer Scout group run by a bunch of telephone engineers. I stuck with AT&T through the Ma
Bell breakup in the 1970s, but parted ways with the firm after going on an
extended trip in the summer of 2000 and committing the unforgivable sin of
using my cell phone to call home a lot.
Because of this sin, I paid through the nose, several hundred dollars at
least, and switched to Sprint as fast as I could after I got home.
Now that AT&T has more or less reassembled itself out of
the sundry pieces that the courts chopped it into, its clout in the market
makes it worthwhile to pay attention when its CEO, Randall Stephenson,
speculates about future pricing structures. On June 1, Stephenson said that “in the next 24 months” we
may see phone companies selling phone, data, text, and other services on a
“data-only” basis. While he wasn’t
too specific about the technical details, this probably means something like
charges based on the number of bits transferred, rather than on other arbitrary
things like number of text messages sent or number of minutes talked.
The arcane and ridiculous way that companies currently
charge for phone and wireless services came about through a combination of
historical circumstances, marketing ploys, and government regulation. Back when there was nothing but POTS
(plain old telephone service, on landlines), the big expense to the phone
companies was their long-distance networks, once they had installed local plant
and equipment. So the custom of a
flat rate for local calls plus per-connection fees for long distance arose, and
at the time it made sense.
Then came multiple revolutions in telecommunications technology: fiber-optic cables and digital
transmission (which vastly lowered the unit cost of long-distance calls) and
wireless, which increased the volume of data sent and added new varieties such
as text and images to the mix.
Technically speaking, it is more challenging to carry the
data representing a two-way phone conversation than it is a one-way text
message. The allowable network
delay can’t be more than a fraction of a second, and there are difficulties
with sidetone (hearing your own voice), echoes, and other things that increase
the cost compared to simply sending some bits from one point to another. Yet my current cell phone plan lets me
talk as much as I like locally, but charges me 20 cents for every text message
I send, even if it’s simply “OK.”
If you send “OK” via ASCII, a seven-bit-per-character code, that’s a
total of 14 bits, or more than a penny a bit. If I paid that much for a typical phone call, it would run into thousands of dollars.
A sensible billing system from a technical point of view
would charge nearly nothing for actions that use nearly no bits, namely, things
like texting and email. Two-way
voice would come next, then still pictures, then movies. The network companies have to structure
their pricing so that customers use enough bandwidth to keep them in business,
but not so much that their network bottlenecks (e. g. cell-phone tower
equipment) gets clogged and spoils the party for everybody.
As things stand, I suspect it’s kind of like a cartel. Everybody is getting away with the inverted
structure of charging more for texts (which use few bits) than for phone calls
(which use more and are inconvenient network-wise). But as soon as some upstart outfit gets out there with a
data-only billing plan, the whole house of cards collapses and the consumer
wins, in my view. My guess is that
the AT&T head’s announcement is a way of telling the market that they are
prepared for the deluge if it comes, though how they are going to deal with it is
not yet clear.
All the same, I look forward to the day when cell-phone
pricing is a little more rational.
I don’t think it will ever be as simple as filling your gas tank, but
the way things stand now, it’s like medical-insurance billing and tax
forms: it takes an expert to catch
another expert who’s cheating, and the average citizen doesn’t stand a chance
against a company that decides to bend the rules, or to create Byzantine price
structures that are legal but so complex nobody can really know if they are
getting a good deal or not. Let’s
hope Mr. Stephenson’s prophecy comes true, and maybe I’ll even consider going
back to AT&T.
Sources: The Austin American-Statesman print
edition carried an AP article by Peter Svensson with the headline “Data-only
plans may be near, exec says” on Saturday June 2, 2012.
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