iPhone madness: What's a gigabyte worth?

iPhone madness: What's a gigabyte worth?

Summary: A while back, frustration with my inability to get online outside of the office drove me to invest in a 3G data service from Hutchinson's 3. For $30 per month, I get 2GB of data that's accessible pretty much anywhere I go (I do all my work in metropolitan areas).

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A while back, frustration with my inability to get online outside of the office drove me to invest in a 3G data service from Hutchinson's 3. For $30 per month, I get 2GB of data that's accessible pretty much anywhere I go (I do all my work in metropolitan areas).

Since then, I have submitted stories from my car, browsed the Web at several conferences, avoided costly hotel internet services while interstate, and conducted voice interviews from hotel lobbies using Skype. Speeds aren't amazing — around 1Mbps peak — but it works much better than shouting. Or nothing.

The funny thing about my 3 service is that when I signed up for it, last September, I was only getting 1GB for my $30; a subsequent price reduction halved this and upgraded my allowance to 2GB. As with petrol, it is clear, the price of data is an abstract, constantly changing thing.

This came to mind when I was contemplating this week's iPhone 3G launch, which has been covered with near hysterical fervour by a public insatiable for news about this game-changing device.

I have previously riffed about the iPhone — a sexy but functionally limited phone attached to a sexy and functionally rich mobile computer. I also predicted that Telstra would struggle to justify offering a device designed to funnel money to a company that competes with Telstra's BigPond content services.

In this context, the thing I find most interesting about the iPhone launch is the way the various carriers have priced their data. You can get an iPhone without a data plan (I'd welcome some informed figures on the split from anybody who works at a telco shop) — but, then again, you can buy a bicycle without wheels. For all its physical appeal, the iPhone is all about mobile data.

Here's the rub: data for the iPhone, for some inexplicable reason that may be simply expressed using laws of physics that are perhaps simply beyond me, is far more expensive than data for other devices — even from the same carrier. Consider for a minute the cost of downloading a gigabyte of data to an iPhone:

  • Optus charges anywhere from $50 per GB (on its $19 cap) to $5 per GB (on its $99 cap), and over-limit charges are $350 per GB.
  • Vodafone plans include a $20 iPhone data premium that prices data at anywhere from $80 per GB (on its $69 iPhone plan) to $20 per GB (on its $169 iPhone plan).
  • Telstra prices its iPhone services at anywhere from $366 per GB (on its $59 iPhone plan) down to $39 per GB (on its $119 Browsing Pack add-on, which is in addition to the cost of data in a normal plan).

The embarrassing pricing of Telstra's iPhone plans confirm that the carrier only offered the iPhone to retain customers who were likely to defect if it didn't offer the device. And while it seemed for a while like Telstra had missed the iPhone boat completely, the plans it finally offered weren't much better.

By charging through the nose for data — except, of course, when iPhone users download content from BigPond sites — Telstra has sought to retain customers whilst keeping them from using their iPhones from accessing other online services. At these prices — said in the blogosphere to be among the world's worst iPhone plans — who is ever going to actually download a video or a decent-sized application onto their Telstra iPhone?

With this kind of pricing, Telstra has succeeded in turning the iPhone into an access device for BigPond services. This will become painfully evident in a month or two, when its poor iPhone customers get their first bills and realise they cannot use their iPhone for much that isn't Telstra related. Tech journalists are in open-mouthed wonder that anybody actually showed up to buy their iPhones from Telstra; Next-G's coverage may be the only rational explanation.

What is even more surprising, however, are the discrepancies between iPhone data charges and those for users of 3G broadband services — even though they're accessing the same network. Here again, Telstra is the leader in price extortion: it charges 3G mobile broadband users $79.95 a month for 1GB of data over its Next-G network at 1Mbps class speeds and will sock you $150 for every extra gigabyte beyond that.

Also inconsistent is Optus, which charges $29.99 for 1GB for mobile data, and as little as $12 per GB on the $59.99 for 6GB plan. Vodafone offers 5GB of mobile data for $39, or around $8 per GB of mobile data. 3, you recall, charges $15 per GB of mobile data.

Can anybody think of a rational explanation for this? Why should downloading a gigabyte of 3G data with a Vodafone-connected iPhone cost up to $80 per GB but downloading 3G of 3G data with a Vodafone card cost just $8?

This may seem like peanuts to users of BlackBerry services, who pay Optus $29.95 per month for just one megabyte of data, and around $4 for each additional MB — or $4,000 per gigabyte. The only saving grace is that the BlackBerry is incredibly efficient with its content, whereas the general Web that the iPhone targets, is not. An Optus spokesperson told me there are no clear plans to change BlackBerry plans in the wake of the iPhone's release.

If it wasn't already obvious that carriers were going to use the iPhone as an excuse to milk Australian punters for all they're worth, the pricing plans now on offer make this crystal clear. Yet the problem isn't the iPhone, as much as the fact that it has crystallised one apparently immutable fact of Australian telecommunications: the cost of data, like the cost of petrol, has nothing to do with what it's worth, and everything with what people will pay for it.

Did you line up for the iPhone 3G, and was it worth it? Did you decide the plans don't make sense? Share your thoughts below — and please come back in a month and tell us about your first bill.

Topics: Apple, Big Data, Telcos, Optus, Telstra

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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22 comments
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  • Can anybody think of a rational explanation for this?

    Apple's ongoing revenue sharing?
    anonymous
  • Apple tax

    can there be another reason?
    anonymous
  • Telstra: $10,000/Gb

    I was just charged $10/Mb ($10,000/Gb) for data by Telstra on my N95. My mistake: Not selecting any "data pack". All the data packs have a horrendous $2/Mb excess charge ($2000/Gb) ... but if you don't select one data costs FIVE TIMES as much.

    I'm being bounced between my business account rep, Telstra accounts support, and Telstra data support just trying to find out where this charge is documented.

    Yay. Telstra sure are rip-offs.
    anonymous
  • That's $32,000/h at HSDPA 7.2

    An update to my last comment: My account rep just confirmed that at Telstra's claimed HSDPA performance of 7.2 Mbit/s, I would be charged $32,000 for an hour of download activity.

    Locally. Not roaming. Just normal usage.
    anonymous
  • ACCC

    Surely it is worth submitting this info to the ACCC.

    Here is the link http://www.accc.gov.au/content/index.phtml?itemId=815327&Go.x=14&Go.y=8
    anonymous
  • ACCC is useless

    The ACCC, as usual, would be of no use in these matters.

    I submitted a complaint to the ACCC years ago regarding ISPs you charge customers for incoming ICMP traffic (PING) that was not generated in any way by the customer. I am still waiting for their response.
    anonymous
  • Like you said

    Your mistake.

    If you choose higher plans the data usage drops dramatically and excess usage also drops. Don't try and B.S. anyone claiming "All data packs have a horrendous $2/Mb excess charge"

    First thing is they are measured in MB not Mb and secondly only the low usage plans are $2/MB, the rest are no more then 25c/MB.

    This may still be $250/GB but if you are using it that much then you should also be smart enough to check your usage on a regular basis.

    Even Optus charges an excess of 15c, although it is cheaper then Telstra based on your logic does that make their $150/GB a RIP OFF as well?
    anonymous
  • And again

    Firstly they typical throughput is 500Kbps to 1.3Mbps meaning you can only reasonably expect to get between 225MB and 585MB per hour, to put it another way no more then 1 hour of high quality video downloaded per hour.

    Assuming anyone downloading that much has some clue as to what plan they need to go on there would be no excess usage, even if there was excess usage that translates to anywhere from $56 to $146 per hour.

    That is an exaggeration of biblical proportions 569 times reality.

    Stop pretending that everyone would be as dumb as you to choose a pay as you go plan and sit on their computer downloading hundreds of MB of data each hour.

    If you want to point fingers let's use your logic and look at data plans across other carriers. Optus offers a 5GB plan as the highest plan and a user could theoretically download 1,205GB of data in a 31 day month at 3.6Mbps. remove the 5GB plan they would be charged 1,200 times $150/GB or $180,000 in a month. Sounds ridiculous but all I am doing is using the same logic you used.
    anonymous
  • data

    "...from Hutchinson's 3. For $30 per month, I get 2GB of data ..."

    and if you were an existing customer when you sign up, or get a phone at the same time you'd get 3GB for $29, that's, ooh, about 50% more.

    Then there's the difference if you use your phone as a modem or just get a usb dongle thingy.
    anonymous
  • And again

    I think you are missing the point somehow - even if you are smart and get on a better plan, the data rates are extremely high on a phone compared to getting a USB doggle and a data plan. I looked up Optus's phone rate and it is $15 for 200Mb vs $15 for 1GB on a USB doggle data plan. (This does not take into account of excess fees.) Why the difference? Supply and demand of course.
    anonymous
  • Palmtop

    What it comes down to for me is that heavy users are better off getting an ASUS eee notebook for $650 and using a dongle.
    Replace;
    * 25c texts with free email (20kB email @ $10/GB = 20*$10/1,000,000(kB/GB)=$0.0002)
    * charged mobile calls with MSN Messenger or Skype and pay for PSTN only when needed
    * browsing on a mobile browser with a real browser.

    The quicker we can remove "voice" (which in a digital world is just data with QoS) from the charging equation the sooner we can stop telcos ripping people off. Then they'll be modapros (MObile DAta PROviders) and everything will be data.
    anonymous
  • Optus 3G Iphone Plan

    CHECK YOUR FACTS FIRST.

    Optus Iphone plans come with INCLUDED DATA.

    If you buy a $79 cap Iphone it comes with 750mb of data included for free, along with your 550 of talk and text. PLUS you get the 8gig iphone for free at that price.

    I consider ANY comparison of data costs for an iphone without taking this into account is EXTREMELY unfair, as both vodaphone and telstra make no such inclusive offer.

    I will be buying my phone from optus.
    anonymous
  • Of course you will

    The staff plan is great
    anonymous
  • True, but...

    This is true but for comparison's sake I was comparing the 'Yes' plans, which charge the equivalent of $5 per month for a varying amount of data (eg $79 'Yes' plan = $74 calls + $5 data). You can of course choose a cap but your call rates for voice will be 70c / min and 35c flagfall per call for the 'Yes' cap, compared with 42c / min and 25c flagfall on a 'Yes' plan. So it very much depends on your usage patterns and your voice vs data mix.

    I would not argue with you: Optus has generally been held to have by far the best iPhone plans and is certainly well worth considering for people looking into the device.
    anonymous
  • Yep, they're giving it away

    You can indeed do very well but my last phone contract was still running at that point so this was a data-only effort. Imagine how happy I was when 3 halved their prices 2 months after I had signed up for a 24-month contract at the 1GB/$29 rate. They didn't shift me to the cheaper 1GB plan, of course! The service has saved me more than once, however.
    anonymous
  • Actually do research before writing an article.

    Hi guys, I'd just like to point out that the issues regarding the Telstra data on these devices and apparent "mismatch of pricing" is an absolute falsification and untruth. If the journalist had actually done any research instead of just trying to Telstra bash, he/she would have easily been able to read the website they linked to, which clearly shows that Telstra Iphones are on DATA PACKS, which cost exactly the same if your on an Iphone, or if your on a standard Next G handset, except that on the I-Phone, you get free WIFI hotspot access, IE MACCAS STORES. So your actually getting more. So please, before you start spouting off crap, actually do some research? cheers, otherwise you piss off people who actually check the facts.
    anonymous
  • There is a rational reason for this

    The iPhone effectively means the operators are little more than dumb pipes to access the internet and Apple's content. If Apple actually felt it could compete in the content space it would allow operators to include the capability to access their own content and then Apple would make their content BETTER. As is, they are happy to lock the customer in to getting only the content that Apple allows. In the same way that the mobile operators have implemented their own "walled gardens" for their content service, so has Apple (i.e. all apps must be authorised by Apple).

    But if you were a mobile operator and had invested millions of dollars in a mobile content service (i.e. Telstra paying for the mobile rights to certain sports, 3 having the mobile rights for cricket, Vodafone for English Premiership football etc) then why would you be keen to sell a device that inhibits customer's ability to access that content that you paid a lot for? Hence the idea that the operators are charging more for data because of the fact that they can't make any money out of their content services (that are typically very high margin services). ALL three operators in Australia are offering this phone as a defensive play. Optus has the best deals because they have the least to lose (as their content service is poor). Telstra and Voda have invested a lot in content. They do not want their customers to buy a phone that means they can't access that content. And 3 built it's brand around the content. I am not surprised 3 does not stock the iPhone at all - why would they?

    And if 3 is trying to get the iPhone as a defensive strategy and Apple won't give it to them, then it is just Apple playing empire makers and breakers. They will revel in the fact that people chose different operators because of the phone. If I was an Apple shareholder, I would want them to offer it to every operator worldwide who wants it - as that would increase the value of the shares as they would sell lots of iPhones. But at the moment I can only assume that Apple is enjoying the power at the expense of shareholders???
    anonymous
  • Your data plan is too expensive

    I believe you guys must be having the most expensive data plans ever.....

    On my Blackberry I get unlimited data plans on EDGE for US$ 19 / month with no contract; you only need to buy a sim card from the exchange.

    For my laptop I have a PCMCIA data card where I get 1GB of data usage free per month as long as I pay three months line rental up front of US$ 100 for all three months. Excess usage charge is 2 US cents per MB of data.

    When I read this post I was really shocked to hear of how expensive data traffic can get around the world!
    anonymous
  • Article idea: Get the official line on data charge discrepancies

    David, great observation in your article:

    "Can anybody think of a rational explanation for this? Why should downloading a gigabyte of 3G data with a Vodafone-connected iPhone cost up to $80 per GB but downloading 3G of 3G data with a Vodafone card cost just $8?

    But this issue plagues not just the iPhone. Depending upon the carrier, downloading data on any phone will be 20% - 100% more expensive than using a dedicated 3G modem. The cost of providing the data is the same to the carrier--we're accessing the same network after all--yet there are huge differences in pricing. All Australian carriers engage in this practice.

    Now this might simply be rent-seeking in an attempt to screw us over, but in the absence of any justifiable reason, wouldn't it be great to get the official line from every telco on why they do this?

    "Why is checking my email on my laptop 30% more expensive when I do it via a tethered 3G phone, rather than a 3G USB modem?"

    Cheers,

    Jo
    anonymous
  • Good article

    Yes please on the pointing stick. Why oh why doesn't anybody release a net book with a pointing stick? I'm not a touch pad fan in any case, but on a machine this small it just doesn't make any sense to use a cramped touch pad, no matter what your opinions are about which is better for a larger machine. For some reason all the review sites complain whenever a laptop only has a pointing stick but http://www.roulettesiti.com half of the users out there would prefer one.
    winslet.jessica@...