2degrees offers what it calls an unlimited mobile data plan. Unlimited in this context doesn’t mean no limits. The plan has restrictions.
Unlimited mobile data only applies to a single device. That usually means a phone. Users can’t tether their laptops or tablets to the device. Nor can they use their device as a Wi-Fi hotspot or use machine-to-machine communications.
Customers on the 2degrees network are told the plans are subject to a fair use policy. There isn’t a formal definition of fair use. It is best to read it as “don’t push your luck”.
In other words the plan may be generous, but it isn’t unlimited in the sense most English-speakers understand. 2degrees plan is $129. For that money you also get unlimited calls and texts1.
Spark, Skinny Freedom plan
Spark is more precise about the terms and conditions of its Freedom plans. You still can’t tether, hotspot or handle machine-to-machine communications. There are unlimited calls.
Customers can use 22GB of data at normal speeds in any given month. After that they can carry on downloading, but everything happens at a slower pace. Skinny has the same conditions. Spark’s plan is $130. At Skinny you pay $120.
Spark’s marketing material doesn’t say how much slower. That’s not surprising. Mobile data speeds vary. It’s possible the official slower speed for enthusiastic downloaders is no worse than they’d see on a bad day.
2degrees Data Clock
There’s another data point: 2degrees’ Data Clock. A day of all-you-can-eat data costs $6. The conditions are similar, no hot-spots, tethering or machine-to-machine and fair use applies.
Let’s assume that customers who go over on the Spark and Skinny plans don’t go a long way over the 22GB point where slower speeds kick in. There will be customers on the plan who use less .
Likewise, we’ll assume that 2degrees’ fair use cut-off point is at more or less the same level, say, 30GB. That’s a gigabyte a day. Let’s also assume this is what Data Clock customers can buy.
Restrictions and limits
The restrictions tell you what you already know: mobile bandwidth is limited. The carriers have calibrated what they think they can get away with before the networks start to creak.
That’s why you can’t tether. It explains why you can’t, yet, choose a mobile data plan as a realistic alternative to fibre, copper or fixed wireless broadband.
It is why Spark’s marketing points out the Freedom plan includes 1GB a day of data on the company’s Wi-Fi hotspot network.
It’s also why both Spark and 2degrees say their plans are only a trial at this stage. And don’t overlook the point that Spark’s offer is only to certain customers. It’s not open to all comers.
Neither carrier wants to flood their networks. Nor do they want loud public whingeing from customers getting a lousy experience.
And that’s the danger. At least for now. There’s only so much cellular bandwidth and users share it. If lots of users hop on at the same time, the network is congested.
Spark has more suitable 4G spectrum than 2degrees. It arguably has more useful 4G spectrum than Vodafone, although that kind of debate can get technical fast. Let’s not go there right now.
The extra spectrum gives Spark more room to move on mobile data plans than its rivals. If the current wave of restricted, yet otherwise generous cellular data plans turns out to be a popular contested market, Spark will do best. That’s both in terms of revenue and network performance.
More bandwidth, bigger data plans coming soon
Cellular equipment makers promise 5G mobile will pump up the market by at least an order of magnitude. That means faster downloads, more users online at the same time, greater data throughput and less latency.
One day. Remember 5G mobile is still at least four years away in New Zealand.
Before then, we’ll see 4.5G. Spark already has 4.5G towers in Christchurch and Silverdale. The company says the towers can deliver faster speeds and offer more bandwidth for users to share.
There’s a catch here, to make the most of these towers users need devices tuned to 4.5G. So far there aren’t any on sale here.
There are two problems with plans to squeeze more data through the airwaves. First, you need more spectrum. Spark and Vodafone already have plenty. 2degrees not so much. But even more is needed in the right spectrum bands to deliver 5G’s promised benefits.
At the same time, carriers need to build more towers to get the promised 5G performance. In busy areas they will need to build a lot more towers. Some of the extra 5G performance is down to dense, small cells as well as more spectrum.
That’s a technical challenge. In some areas it is a political one. Communities are torn between wanting connectivity and not wanting to be overshadowed by too many antennae. Most of all, it is a financial challenge.
The earlier investment in 4G technology is only now paying off. Sure, the economics are sound, but telcos pour hundreds of millions into wireless networks. Telecommunications companies have to recover that money.
On a positive telecommunications equipment tends to get cheaper in relative terms over time.
At the same time some installed 4G hardware is upgradable. Even so, the cost of putting in enough 5G cellular capacity so that everyone who wants can have unlimited wireless data with tethering, hotspots and the rest will be high. It runs to billions2. That means the cost of using it is unlikely to drop.
The cost of unlimited mobile data
2degrees entered the unlimited data game with a carefully calibrated price. If the charge was much lower than $130 it would be in danger of cannibalising its existing high-end plans.
If the price was much higher it would be open to undercutting from rivals.
There’s still a healthy margin in $130. What’s more, it does something 2degrees has struggled with through its history: raise the average revenue per user.
It’s unlikely any carriers will go much below this level with all-you-can eat data plans. Skinny’s $120 plan could be the anchor price. If carriers want to compete they can add value. They could, say, offer 10GB a month of tethering on top of today’s package.
Somewhere in the management spreadsheets at 2degrees, Spark and Vodafone is a calculation of a price for a full unrestricted mobile data plan. Whatever the number, it will be higher than $130.
No doubt there are people who would be happy to pay more, say, $200 for such a plan so long as the performance was acceptable. And there’s the problem in a nutshell. Today’s cellular data can be fast, affordable and reliable, but not all three at once.
- Does anyone still care about how many texts there are with a mobile plan? We seem to adapted to the idea they are, in effect, unlimited and part of the mobile deal. ↩︎
- Mobile carriers can cut costs if they opt for an open access model with shared towers. They may not all volunteer for such an approach, but it could happen. ↩︎