Blog Post

Vodafone’s Netflix sweetener is tasty, but it exposes the limitations of 4G data pricing

4G is a wonderful road for mobile video to travel on – its high speeds and low latencies allow an unprecedented user experience when watching films and TV shows on the very small screen. However, decent-quality video uses bandwidth, and many carriers’ pricing remains incompatible with this new reality.

Case in point: on Thursday, the British operator Vodafone(s vod) announced a promotional partnership with Netflix(s nflx), through which customers on Vodafone Red 4G plans priced from £26 ($44) will from July be able to get a free 6-month subscription to the online video service. This is a new alternative option to free Spotify Premium access. As is the norm with Vodafone’s 4G plans, the first 3 months come with “as much U.K. mobile internet as you want” – after that, however, it’s back to standard data allowances.

Netflix, by its own guidance as passed to me by Vodafone, consumes 1GB of mobile data per hour, if the user is watching a standard-definition stream. Bump that up to high-definition – as you will no doubt want to do if you’ve got a snazzy new mobile device with retina or similar display – and you’re talking 3GB an hour.

Vodafone’s £26-a-month SIM-only deal provides 3GB of data a month. Even its priciest SIM-only deal, which I’d say offers its best value for money, costs £41 a month for 9GB of data. Three hours (two kids’ films, let’s say) of high-definition content on that plan, and any more surfing on that plan – even normal web usage – will take you over your limit.

I don’t want to knock Vodafone in particular. Indeed, the carrier should be commended for not sabotaging net neutrality by “zero-rating” the Netflix content (having it not count towards the allowance) and thereby disadvantaging Netflix rivals who want to deliver their services over Vodafone’s network. I also totally get that a good chunk if not most of this Netflix viewing will take place over users’ Wi-Fi connections, rather than troubling the mobile network. Also, it’s free stuff.

However, a promotion like this does highlight a certain market-driven absurdity that characterizes this stage in 4G’s development. The technology is new and the network upgrades recent or ongoing, so carriers are charging as much as they can, which involves setting usage limits that utterly stifle the potential of the technology — i.e. being a full replacement for fixed-line broadband, for some people.

Over time, these limitations will be eased, just as they were with 3G. But for now, for many people, going 4G is like being given a supercar with a tiny gas tank and only a monthly refill.

7 Responses to “Vodafone’s Netflix sweetener is tasty, but it exposes the limitations of 4G data pricing”

  1. Dean Bubley

    I’m not sure that Netflix *on mobile* consumes that much data.

    Bear in mind that app developers can usually detect the network type & tweak performance of their app (eg resolution, compression) accordingly.

    Netflix itself has a lower-grade option of 0.3GB/hour even for TV, so I guess on mobile they could/should engineer down to a lower rate if needed.

    • David Meyer

      These were the figures sent to me by Vodafone itself. I think it’s certainly plausible that a tablet user with super high res might use full quality.

  2. A Ch0w, sneeze

    I find it strange that people sign up with Vodafone and then complain about their data caps when Hutchinson 3G is right across the street offering uncapped 3.5G for £15 a month.

  3. Kevin Lee

    You miss the point entirely. Vodafone offered Netflix
    in the hope that, bumping up against the data cap,
    the customer will upsell him/herself to a higher data
    bucket. Data is the last bastion of overcharging by
    the carriers, as there appears to be no other technology
    to disrupt the status quo.

    WiMax was going to be that disruptive technology,
    which would have allowed new entrants to break up
    the viselike grip by the carriers on mobile data. But
    WiMax’s backers gave up on it after sinking over $5
    billion into the technology. Now that WiMax is gone
    as a competitive threat, carriers are at business as
    usual, gouging the public.

    • Keith Hawn

      You miss the point entirely. By “bumping up against the data cap” by 5 PM on the first day of their plan, Vodafone subs will pillory the company on social media and abandon the carrier in droves…

  4. Is the potential of mobile data really to become a full replacement for fixed-line broadband? I’d say actually that’s utterly wasteful. All that enormously clever mobile technology seems overkill to try to supplant what’s becoming the norm – FTTX & wifi combo. I’d argue that operators have adopted the right approach in mostly moving away from flat rate charging and conditioning users to think the more they use the more they have to pay

    Vodafone’s move is not only a mistake because it reveals the limits of it’s data pricing but also because the vast majority of Netflix viewing occurs in the home where Vodafone currently do not play in the UK

    • David Meyer

      Indeed – there’s a reason Vodafone is trying to buy up fixed-line networks wherever it can. However, a lot of people really do want mobile to provide what fixed-line can’t, particularly in emerging markets and in rural areas of developed markets. It would be lovely for fiber to serve all those people, but the economic reality means they’re much more likely to get what they need through the airwaves.