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Sunday 6 April 2008

The cost of Mobile "Broadband"

I was just listening to some Vodafone PR rep on Today FM's Sunday Business Show and was fuming at the mouth at her compete failure to forthrightly answer the questions that were raised. I was even more irritated by the questions being put by the host and the other guests - nobody seems to have a handle on the scale of the extortionate scam that is being run by the cellular operators.

Their claim is that they have a mobile broadband experience available with national coverage and that it is affordable and even cost effective\competitive. In Vodafone's case they claim "88%" cover for 3G services but will only explain what that means if the person posing the question really nails them - in this case the SBS didn't push the question sufficiently. It's not just Vodafone though - the others aren't significantly different although in some areas their competitors really are showing them up,

Now for starters I am a fan of cellular broadband and I want it to succeed but these sort of claims are clearly rubbish and need to be exposed so that consumers can understand what they can get and feel happy to pay for it if they want to use it. The providers also need to be pressured into actually delivering the quality of service that consumers deserve at better pricing. It's incredible that Vodafone and O2 can charge lower rates across the board in the UK when they parted with tens of billions Sterling to purchase their UK licenses and had to pay nothing for the same licenses here in Ireland. At the time it was estimated that the costs of those licenses would amount to something close to £100-200 per subscriber per annum for the lifetime of the 3G technology. I would love to see our regulator putting them under the microscope for that - the decision not to charge a license fee was supposed to lead to lower prices and it clearly has failed to do that.

Anyway on to the claims made by Vodafone. Their current claim of 88% coverage for 3G services refers to the percentage of the population covered, I believe. In practice it means that baseline 3G services (ie 384kbps down and 64kbps up) are only available within about a kilometre of large towns and cities. If you find yourself in an area that is even vaguely "in the country" you will fall back to the GSM (2G)  voice and the GPRS data network with its 50-60kbps downlink and 16kbps uplink data rates. High speed 3G (HSxPA) services (with 1-3+ Mbps downlink and 64-1Mbps uplink) are only available in very limited large urban areas at the moment. The HSxPA roll out will extend to cover the existing 3G services base over the next year or so but Vodafone do not currently have any near or medium term plan to replace the bulk of their geographical are cover with 3G services because they have a significant technical and financial problem in doing that: there are no (or not enough) appropriate 3G frequency bands that are cost effective for large rural coverage right now and that will remain the case until the 900Mhz GSM band can be re-allocated to 3G. A 900Mhz 3G base station is in practice capable of covering 4-16x the physical area that an 1800Mhz cell can cover using transmitters and handsets of the same power. Vodafone have a major problem moving their GSM services from 900Mhz because of all of the (mostly rural) telemetry services that they provide over their 900Mhz network to electricity, water, gas and other utility providers who all jumped on cellular telemetry solutions from Eircell way back in the mid 90's. I don't think any of the other Irish cellular providers took a significant part of that market but until Vodafone is in a position to replace that GSM 900 network they will certainly find it nearly impossible to extend their coverage significantly past 90% of the population (ie <<20% of the geographical area of the country) and if they can't compete in that market O2 are probably not going to bother either. Neither 3 or Meteor are in a financial position to fill that gap so for now, I'm afraid, rural mobile cellular broadband remains a distant dream.

Vodafone also claimed that 1Mbps is available for most users today [ note they didn't claim 88% had 1Mbps available just that 88% were covered by 3G] and 3Mbps will follow soon. I don't think that the 1Mbps claim is true in the way most people would understand it but if the initial HSDPA rollout has progressed to cover all of the large cities in the country then it might be arguably true. Assume it is true for a minute.

Right now if you buy a 3G data capable mobile phone as a consumer the basic Vodafone tariffs give you the ability to buy a data bundle for €10 per Month (15Megabytes) or €15 per month (25 Megabytes). The killer is in the marginal price per meg of €2.50\€2.00 for any data in excess of the bundle. [This has halved in the last couple of weeks, it used to be €5 per Megabyte for any data in excess of the bundle]

If you wanted to watch a movie on this "Mobile Broadband" service you would be sucking down somewhere in the order of 1Gigabyte of data. Now that might be a bit mad on a phone but if Vodafone do actually live up to their promise and deliver a 3Mbps service sometime soon you could (in theory) download a 1GByte movie file in about 45minute - 1 hour which isn't that bad. At a cost of €2 per Megabyte for each meg over 25Meg though it would cost you €2000 for the privilege, which is crazy money to be charging for what is relatively little data in this day and age.

If you buy a Vodafone 3G data modem for your PC you get 5GB of data for around €40 per month so you could actually use it to downlaod and watch some movies [a reasonable expectation from a "Broadband" product] but again any data above that gets charged at the ludicrous marginal rate of €20 per Megabyte - so your sixth movie download would cost you €20,000. Thanks to Brad for correcting me on this, it's 2c/meg which is far more reasonable, sorry for that folks.

O2's charges used to be even worse but their iPhone data plan gives me 1Gigabyte of data for free and all excess data is charged at 2c/Meg [that's 100 times cheaper than Vodafone's marginal rate] so I could get one movie download for free and any additional one would cost me about €20 [including the hypothetical sixth one which would then have been 1000x cheaper than it would have been over a Vodafone 3G modem]. The problem with the iPhone [currently] is that it only supports EDGE data rates which are around 100kbps at best so a movie would take a full day to download at best and probably would take 2-3days to download in practice. It's pretty obvious that almost nobody will ever download significantly more than 1GB / month on a current iPhone so O2 Ireland's decision to cap it at 1GB was a bit stupid - they would never lose any money on it and they have taken a lot of pointless criticism over that minor point since nearly all other iPhone suppliers have just given the users an "unlimited" data plan. Personally I could care less - I've been using it heavily from my perspective for three weeks and I've only used 30Meg of EDGE data in total and have yet to incur a single additional charge of any sort on my monthly bill. That's all well and good from a cost perspective but the iPhone's limited cellular radio cannot be described as mobile broadband under any circumstances.

And in all of this I haven't even started on the craziness around international mobile data roaming charges that are so arcane that Vodafone once had the nerve to tell me that until they actually run their monthly accounts they could not tell how much a particular roaming data connection was going to cost. That was total nonsense, of course, but a senior Vodafone exec insisted it was true and I would assume that cellular execs will continue to make such claims until they are publicly ridiculed about how incompetent it makes them look.

Clearly none of the Irish providers are actually anywhere close to delivering a useful and cost effective mobile broadband experience and any time anyone of them claims that they are they should be smacked down.


Brad said...

While I agree with much of what you say, you need to check some of your facts. I have a 3G modem from Vodafone, and usage over your 5GB allowance is charged at 2c per MB.

I did have a small panic attack when I read your post, but I checked their website and it's there in black and white.

Glad to hear your data usage on an iPhone is so low, I'm very tempted to get one but was worried about excess usage charges - I intend to use it a lot!

Joe Mansfield said...

Thanks for the correction - the Vodafone published rates are definitely 2c/meg for excess data which on the Broadband 3G Modem which is very good news.
The excess usage charge for using mobile data on a standard Vodafone Ireland phone SIM remains ~€2/Meg which is (IMO) completely excessive.