How much quota do we need anyway? (Credit: David Braue/CBSi)
Opinion If you were ever a kid (and so many of us were) you probably, at one point in time, played that game where you tried to think of a bigger number than your friends. And, when a million bazillion jazillion jazillion just wouldn't do, it was time to pull out the trump card: googol (that's 1e100 for those of you keeping track). And that, invariably, led to an even bigger trump card: googol times infinity. Then everybody either started a pig pile, or just sort of lost interest and went back to playing four-square.
Our illustrious internet service providers (ISPs) seem to have caught themselves engaged in a similar sort of game lately, starting as Telstra tried to undo years of broadband quota neglect with its unilateral decision to halve the price of its top-end plans. Competitors naturally complained, as they are wont to do, but this time the reaction was less sympathetic than it has been in the past — and not just from me.
This time around, you see, the problem doesn't seem to have been that Telstra's quotas were being offered at uneconomical prices; rather, it was that Telstra was playing hardball, forcing competitors to sacrifice profit margin or risk losing market share to customers who buy based on bandwidth quotas and nothing else. Telstra's pre-National Broadband Network customer-hoarding motivations aside, the company truly had thrown the fox into the hen house.
Now, the hens have spoken. Or squawked, as the case may be. Recent weeks have seen an explosion in broadband quotas, with iiNet leading on the back of its 1TB plan, TPG matching it, and Primus trumping them both with a 1.1TB offer. Internode, last we heard, was still considering its response.
It was a masterstroke of marketing, confirming not only that competing internet service providers live to paint Telstra as a stodgy and retroactive incumbent, but that data quotas have all but lost their value as anything more than a customer acquisition tool. It has also, however, lent weight to Stephen Conroy's recent claims that capped plans were on their way out.
iiNet's Michael Malone, who recently put his competitors into line — literally — recently refuted that, promising that there was no place for AAPT's unlimited internet plans in the iiNet kingdom. But even he would, I submit, have to concede that offering customers a full terabyte of data per month is tantamount to offering an unlimited plan.
It was a masterstroke of marketing, confirming not only that competing ISPs live to paint Telstra as a stodgy and retroactive incumbent, but that data quotas have all but lost their value as anything more than a customer acquisition tool.
Remember the movie Brewster's Millions, in which Richard Pryor is tasked with spending $30 million in a month to inherit an even larger fortune worth $300 million? Your average punter is facing the same situation with these 1TB plans; I daresay that 99 per cent of us would struggle to find anywhere near that much data to download in a month — even if they were downloading pirated movies by the screenful (if you're keeping track, 1TB equals around 1400 movies per month, or the equivalent of downloading 47 pirated movies every day; it would be physically impossible to watch them all, except on fast-forward).
ISPs, of course, are counting on this, hedging their bets that 1TB is simply a theoretical figure and that they are, for all intents and purposes, selling an unlimited service that just isn't called that.
Yet this rush for the biggest broadband plan has created some curious side effects: firstly, Telstra is in the unusual position of being the only major ISP (well, OK, there's Optus, but not for long) that is actually marketing plans that reflect what users will actually get — although odds are that many users will simply flee towards the bigger number.
More significantly, the explosion of the fixed broadband plans seems to be having knockoff effects on the wireless broadband space as well: VHA has pushed its quotas skyward after recently cutting the price of its prepaid broadband packs and offering up to 10GB of data for just $49 per month. Vividwireless recently launched official unlimited plans, while Telstra seems to be releasing faster dongles every few months but favouring speed over generosity. (All carriers will still, it should be noted, screw you seven ways to Sunday by charging you $20 per megabyte if you dare switch on your smartphone's data capabilities while in another country, but that's another matter.)
Wireless broadband plans haven't reached the dizzying heights of their fixed-broadband cousins, but their continuing adjustment suggests they are heading in the same direction. Yet even with just a few gigabytes of usage, mobile carriers are using some of the same hedging strategies they're doing on fixed connections: it's probably a safe bet that most mobile broadband users would struggle to use 10GB of data in a month. Having experienced my share of mobile broadband, I'd venture to suggest that your average user would have died of boredom from waiting for content to load, long before they reached even that seemingly modest milestone.
Vodafone (unlike its competitors) has a vested interest in increasing wireless usage, so it will be the one to watch; it will also be monitoring the actual take-up of its 10GB plans with great interest. How many people buy wireless broadband plans based on what they actually need, as opposed to what they think they need? I'd suspect that the majority of smartphone and wireless broadband users are still thinking in terms of fixed-broadband quotas when their actual usage is a fraction as high. Heck, I'm no worst-case scenario but I've struggled to pass around 150MB of iPhone data usage in a typical month.
How many people buy wireless broadband plans based on what they actually need, as opposed to what they think they need?
If I am wrong, and if they are wrong, and if users are in fact using this much wireless data, it bodes well for mobile broadband demand, but poorly for the networks' chances of meeting this demand. The thing is: we have a pretty good sense of how much broadband fixed users are consuming, but shifting usage patterns mean nobody really knows yet how much wireless broadband we'll consume given the chance. It may be a while before we see the 1TB wireless plan, but in the meantime ISPs seem to be playing a value-for-money game where consumers are the only winners.
Have you switched to a 1TB plan? Why? And, if you're using a wireless broadband plan, are you committing to higher-quota recharges? Why?