Why Is Broadband Internet Becoming More Expensive To Consumers?

If you’re a tech-savvy consumer, you’ve probably noticed a trend lately.

Why are so many data providers switching to a tiered pricing strategy?

I first took notice a few months back when AT&T announced that they would be eliminating their unlimited data packages for their cell phones (namely the iPhone) and for the iPad 3G. They were at least decent enough to “grandfather in” those who already had unlimited plans, but new customers were left in the cold.

This actually directly impacted my decision to purchase an iPad, and ultimately likely hurt Apple sales all around, because there was no way I was going to buy a 3G iPad that cost me an extra $30 per month, and be limited to only 2GB of data for that price, especially when other wireless providers offered unlimited 3G data for the same price or less. So, ultimately, I still purchased an iPad, but I decided to go with the cheaper, WiFi model instead. That’s $130 less of my money going to Apple. But it would have been nice to have that data anywhere without needing WiFi or wireless tethering to my cell phone.

But this is just the tip of the iceberg.

Just 2 days ago, Verizon Wireless announced that it too would be switching to a tiered pricing plan for its data, and would no longer be offering unlimited data for smart phones. Even the CEO of Sprint announced that if data usage goes up too much, they may switch too.

Even residential ISP’s are beginning to switch to tiered pricing more and more.

What is the cause of this? Why the new trend?

Let’s look at the facts as to why this should not be happening now, and should NEVER happen.

First off, just here in America, the percentage of Americans with broadband internet in their homes has skyrocketed since it first became available. Simple rules of supply and demand state that because sales figures have improved so much, prices should drop.

They haven’t.

Point number 2: As technology becomes more widely available, and is no longer “new” technology, prices go down. We see it with cell phones and computers all the time. How many of you have had your broadband bills go down because your provider came out with a better technology or higher speed than before? Most just say “pay us $10 MORE than you’re already paying, and you can have 5mbps more speed.”

As the newer, faster connections come out, shouldn’t the older, obsolete ones be cheaper?

They aren’t.

Point 3: Americans are getting shafted when it comes to the quality of our connections, yet we pay MORE for our connections.

And don’t let the graph fool you. This is just the averages of what people actually have in their homes, not what’s available or what they pay. In the UK, you can get a 100mbps connection for the price of my 30mbps connection.

The real kicker? Advertised speeds are seldom ever reached, depending on provider. I pay for a 30mbps connection that is supposed to be a guaranteed minimum of 15mbps during the day, with speeds peaking at night. My speed drops as low as 2mbps during the day and 5mbps at night.

That’s not exactly what we agreed upon, is it, Road Runner?

The even MORE real kicker?

More ISP’s are beginning to throttle bandwidth based on what you’re using your connection for. So just because you shell out extra for that 50mbps connection, they can throttle your torrent speed down to just 10kbps. That’s just a little more than dialup speed. Many ISP’s also throttle YouTube, NetFlix, VoIP services, and many music and file sharing and streaming services.

So they want to charge us exorbitant prices, then not give us what we pay for, then tell us what we can and can’t use it for whenever they feel like it?

Something needs to change, and soon, because the USA is going to be left behind on the tech revolution because these companies want to make extra money for free.

And don’t cry to me about a recession. We’re on the way back up, and have been. ISP profits are still ridiculously high. Believe me, you guys can afford to lower the costs a bit.

Do you have any idea how many iPhones would be sold if they had a $50 unlimited talk/text/data plan like MetroPCS has?

I don’t even think they could keep enough in stock. I’d buy one for sure.

An open notice to cell phone companies: Lower the cost of your service and more people will buy your phones and switch, hence making you even more profits. It’s 2010, why are cell phone bills higher than they were in 2000?

Greed.

Seriously guys, knock it off.