Blog Post

As Data Overtakes Voice, Mobile Costs Rise

Chances are you’re using your cellphone more for data purposes than voice calls these days. That’s a shift we’ve covered here before, and one that New York Times reiterates by noting that last year, the amount of data in the form of texts, email, video and web surfing surpassed the total amount used for basic voice communication for the first time ever. And the rise of social networking means this trend will only pick up steam as time goes on. But while unlimited voice plans are readily available, the bandwidth required is enormous compared to that needed for voice, which means carriers with a relatively fixed network infrastructure can’t offer truly unlimited data.

Using Rysavy Research’s “Mobile Broadband Usage Constraints” report, I chose a few basic activities to represent common consumer usage. The assumption used in the report is that a consumer would be doing each activity for 60 consecutive minutes — not necessarily a real-world scenario, but a baseline used to illustrate a glaring point in the final column: the bandwidth required for data activities as compared to a voice call.

Bandwidth use of voice and data activities
Activity Bandwidth Throughput/hour MB/hour Voice multiple
Voice 9 kbps 31.64 Mbps 3.96 1
Medium-quality music stream 128 kbps 450 Mbps 56.25 14
Browsing 1024 kbps 3600 Mbps 450 114
Streaming video 2048 kbps 7200 Mbps 900 228

Again, there’s some assumptions built in here, but for illustrative purposes, it’s easy to see why carriers with a relatively fixed network infrastructure can’t offer truly unlimited data.

For starters, there’s only so much wireless bandwidth to go around and when consumers are partaking in activities that use 228 times more of that bandwidth than a voice call, limited carrier infrastructure simply can’t handle the overall demand. Secondly, the pricing model isn’t equipped for truly unlimited use. Using a relatively standard $60 mobile broadband plan that includes 5 GB of data throughput a month, the cost per hour of activity rises dramatically. These plans equate to customers paying for 1.2 cents per megabyte of usage, so that hour of video streaming costs $10.55 an hour — 5.68 hours of video playback would eat through the 5GB purchase and leave no bandwidth for any other connected activities.

I’m a consumer and one that wants unlimited 3G access more than almost anything. But I also see the other side of the coin — can carriers provide an all-you-can-eat broadband buffet table at a price that’s affordable to us?

Related content from GigaOM Pro (sub req’d):

Mobile Broadband: Pricing for Profits

15 Responses to “As Data Overtakes Voice, Mobile Costs Rise”

  1. As data use increases, alternate access mechanisms become paramount. It is time to start working from the inside out. Leveraging short range low cost or free spectrum wherever possible and using cellular spectrum as a last resort. Emerging TV White Spaces, secondary markets for spectrum and cognitive (database driven) networking technologies can provide a big push in this direction.

  2. The numbers in the “Bandwidth use” table are overly exaggerated and grossly inaccurate (for a mobile device.)

    “Browsing” at 1 MB/s??? Generating 3600 Mbps Throughput/hour… What?? Why would you add such a senseless column if you are putting the exact same data in the MB/hour column which is right next to it (converting Throughput value from Mb to MB)

    “Video Streaming” at 2 MB/s??? Even YouTube encodes at 260kbps and that’s watchable on “Desktops”. A mobile device should be able to display a high quality video at that rate considering the screen size… perhaps much lower with a better codec.

    • gmazin

      I’m going to agree here. As you’ve pointed out in another article, wifi is growing fast. I find myself using 3g instead of wifi only in places such as the car (where I can’t watch videos really…I’m not driving FYI) and work (where I shouldn’t watch videos). The problem is, at $60/month, consumers think it’s a replacement for a primary home Internet connection, which it’s not.

      • Brian

        Ok wi-fi is not everywhere. Heck even regular broadband isn’t everywhere. I have friends that lives just a couple of miles out of town where Verizon 3G is the only choice for “broadband”. So if you claim that 3G isn’t meant for primary home internet tell that to the cable and telco ISPs that REFUSE to provide access to broadband. Also not to mention that mobile broadband IS in fact part the of FCC’s plan to bring everyone broadband.

  3. I suspect a larger issue than the price of all-you-can-eat broadband is simply obtaining the necessary spectrum space from the FCC. There are so many entities that won’t want to give up the space and will fight very hard to keep it.

    • Brian

      Why should OTA broadcasters have to give more spectrum up? They just gave up 108 MHz( channels 52-69 ) last year when analog TV shut down. Also not forget they gave up 84 MHz back in the early 80’s when they had to give channels 70-83 to the mobile companies. If you also consider that channels 2-6 are rarely used anymore because they are terrible for DTV, broadcaster already use only 56% of the spectrum they used before 1983. Now the FCC wants another 120 MHz which would mean broadcasters would be left with just 30% of their original bandwidth. And that’s not counting the fact that in many areas channels 14-20 are reserved for emergency personnel like fire and police.