A while back, frustration with my inability to get online outside of the office drove me to invest in a 3G data service from Hutchinson's 3. For $30 per month, I get 2GB of data that's accessible pretty much anywhere I go (I do all my work in metropolitan areas).
Since then, I have submitted stories from my car, browsed the Web at several conferences, avoided costly hotel internet services while interstate, and conducted voice interviews from hotel lobbies using Skype. Speeds aren't amazing — around 1Mbps peak — but it works much better than shouting. Or nothing.
The funny thing about my 3 service is that when I signed up for it, last September, I was only getting 1GB for my $30; a subsequent price reduction halved this and upgraded my allowance to 2GB. As with petrol, it is clear, the price of data is an abstract, constantly changing thing.
This came to mind when I was contemplating this week's iPhone 3G launch, which has been covered with near hysterical fervour by a public insatiable for news about this game-changing device.
I have previously riffed about the iPhone — a sexy but functionally limited phone attached to a sexy and functionally rich mobile computer. I also predicted that Telstra would struggle to justify offering a device designed to funnel money to a company that competes with Telstra's BigPond content services.
In this context, the thing I find most interesting about the iPhone launch is the way the various carriers have priced their data. You can get an iPhone without a data plan (I'd welcome some informed figures on the split from anybody who works at a telco shop) — but, then again, you can buy a bicycle without wheels. For all its physical appeal, the iPhone is all about mobile data.
Here's the rub: data for the iPhone, for some inexplicable reason that may be simply expressed using laws of physics that are perhaps simply beyond me, is far more expensive than data for other devices — even from the same carrier. Consider for a minute the cost of downloading a gigabyte of data to an iPhone:
- Optus charges anywhere from $50 per GB (on its $19 cap) to $5 per GB (on its $99 cap), and over-limit charges are $350 per GB.
- Vodafone plans include a $20 iPhone data premium that prices data at anywhere from $80 per GB (on its $69 iPhone plan) to $20 per GB (on its $169 iPhone plan).
- Telstra prices its iPhone services at anywhere from $366 per GB (on its $59 iPhone plan) down to $39 per GB (on its $119 Browsing Pack add-on, which is in addition to the cost of data in a normal plan).
The embarrassing pricing of Telstra's iPhone plans confirm that the carrier only offered the iPhone to retain customers who were likely to defect if it didn't offer the device. And while it seemed for a while like Telstra had missed the iPhone boat completely, the plans it finally offered weren't much better.
By charging through the nose for data — except, of course, when iPhone users download content from BigPond sites — Telstra has sought to retain customers whilst keeping them from using their iPhones from accessing other online services. At these prices — said in the blogosphere to be among the world's worst iPhone plans — who is ever going to actually download a video or a decent-sized application onto their Telstra iPhone?
With this kind of pricing, Telstra has succeeded in turning the iPhone into an access device for BigPond services. This will become painfully evident in a month or two, when its poor iPhone customers get their first bills and realise they cannot use their iPhone for much that isn't Telstra related. Tech journalists are in open-mouthed wonder that anybody actually showed up to buy their iPhones from Telstra; Next-G's coverage may be the only rational explanation.
What is even more surprising, however, are the discrepancies between iPhone data charges and those for users of 3G broadband services — even though they're accessing the same network. Here again, Telstra is the leader in price extortion: it charges 3G mobile broadband users $79.95 a month for 1GB of data over its Next-G network at 1Mbps class speeds and will sock you $150 for every extra gigabyte beyond that.
Also inconsistent is Optus, which charges $29.99 for 1GB for mobile data, and as little as $12 per GB on the $59.99 for 6GB plan. Vodafone offers 5GB of mobile data for $39, or around $8 per GB of mobile data. 3, you recall, charges $15 per GB of mobile data.
Can anybody think of a rational explanation for this? Why should downloading a gigabyte of 3G data with a Vodafone-connected iPhone cost up to $80 per GB but downloading 3G of 3G data with a Vodafone card cost just $8?
This may seem like peanuts to users of BlackBerry services, who pay Optus $29.95 per month for just one megabyte of data, and around $4 for each additional MB — or $4,000 per gigabyte. The only saving grace is that the BlackBerry is incredibly efficient with its content, whereas the general Web that the iPhone targets, is not. An Optus spokesperson told me there are no clear plans to change BlackBerry plans in the wake of the iPhone's release.
If it wasn't already obvious that carriers were going to use the iPhone as an excuse to milk Australian punters for all they're worth, the pricing plans now on offer make this crystal clear. Yet the problem isn't the iPhone, as much as the fact that it has crystallised one apparently immutable fact of Australian telecommunications: the cost of data, like the cost of petrol, has nothing to do with what it's worth, and everything with what people will pay for it.
Did you line up for the iPhone 3G, and was it worth it? Did you decide the plans don't make sense? Share your thoughts below — and please come back in a month and tell us about your first bill.
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Jussy
15/07/2008 10:55 AM
The hula-hoop, the cup-and-ball, skinny ties..... it's just a fad. I LOVE technology, but I think I will be giving this one a miss.
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ben
15/07/2008 01:22 PM
One word - VOIP. The telco's realise that cheap data on an iphone with a skype app = the death of expensive calls. But one will break and the others will have to follow. Bring it on!
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Joey Jojo
15/07/2008 03:10 PM
Ben: Just one little problem...Apple forbids VOIP applications to be developed. This was well published across sites when the iPhone SDK was released. Bring it on? ...you might want to sit down while you wait.
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simmo
15/07/2008 04:53 PM
Ready to buy on Friday but clever enough to wait for the Telstra data plans because it was highly suspicious they were missing from the Press Release. I don't care how good NextG is, at that price I'm gone!
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Telco bypass fan
15/07/2008 05:45 PM
Voice and data plans are no more than pricing arbitrages hidden behind marketing hype by telcos. The iPhone (the world's sexiest dual mode handset) has now been unleashed so maybe Wifi hotspots have a bigger future than their past performance has suggested?
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pindy
15/07/2008 11:43 PM
The final line in the article: "the cost of data, like the cost of petrol, has nothing to do with what it's worth, and everything with what people will pay for it." makes no sense. Data, petrol or anything else is worth what people are willing to pay for it. The telcos have punted on people being willing to pay more for data access on an iPhone than on other wireless devices.
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Ken
16/07/2008 01:34 PM
Surely the telcos are all acting in what can only be describe as collusion, in that there is so little to differentiate their plans on pricing. Given the cost differential between broadband and the phone data plans, if the ACCC was any use at all they would be down on all of them like a tonne of bricks, for artificially manipulating the price.
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mikel
16/07/2008 06:24 PM
@Pindy What the? The final line of the article and what you said mean exactly the same thing... Have we been doing a little too much drinky-drinky at worky-worky? :D
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Hutchison
17/07/2008 07:23 AM
It's Hutchison, not Hutchinson...
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