Verizon's relentless promotion of the new Motorola Droid Bionic, and everything you can do with the carrier's 4G LTE network, is putting Verizon Wireless on a collision course with its own customers over its restrictively capped data plans.
If Verizon doesn't change its policies soon, it's either going to face massive consumer rage over "bill shock," or lose the advantage of its expensive LTE network as Bionic owners shy away from logging on to 4G.
The tension between high-speed networks and data caps isn't going to be news to dedicated followers of mobile technology, but the combination of the huge buzz over the Droid Bionic and Verizon's fast-expanding LTE network are pushing awareness of LTE to a new level. If these new LTE users start running their Droid Bionics the way Motorola and Verizon apparently intend, they're in for a big shock at the end of the month.
But there's a fly in the ointment. In just four days of testing, with half an hour of Netflix, three hours of streaming radio, two e-mail accounts attached and some app downloads, I ran up 600MB of data usage. At that rate I would have killed a $30/month, 2GB monthly plan in two weeks.
My half an hour of Netflix alone used 150MB, which means three two-hour movies would just about nuke your monthly allotment. I can see many Droid Bionic owners stopping, reeling, and then either backing off the LTE network or having to bump up to the $50/month, 5GB plan.
And I'm not even getting into tethering your phone to a laptop here.
Why LTE Makes Data Caps Worse
Capped data plans have been an issue for a while now, but once you've used LTE, you see why there's a new problem. 3G and some other forms of 4G such as HSPA+ 21 and WiMAX, are slower than most Wi-Fi hotspots by a large enough margin that you tend to want to use Wi-Fi when it's available just because it's a smoother, faster experience. That slows data consumption on 3G phones, and it's one reason why we found iPhone users in our office only typically eat up 250-500MB/month.
But LTE feels just as fast as Wi-Fi in many circumstances. That means the only reason you'd switch to a hotspot, given sufficient LTE coverage, is fear of high bills. And that's a less immediate driver than being able to speed up your connection.
This is a sad waste and a lot of missed potential for Verizon, which regularly talked about creating a new paradigm in data plans before it launched its 4G network. Back in those days, Verizon Wireless CEO Lowell McAdam would stand on stage saying how new data plan structures could let Verizon get to the delightfully-named "500 percent penetration," with each household owning five devices (mostly not phones) that connect to Verizon's network.
That isn't going to happen as long as Verizon's only thinking on data plans is "like they used to be, just more restrictive."
LTE isn't just faster than Verizon's old 3G network; it's more efficient, too. LTE can carry both more data traffic and more voice traffic per megahertz of spectrum than Verizon's 3G CDMA EVDO system can. Even given build-out costs, you'd think the consumer price per byte would be coming down, not going up. But instead, prices are rising. Verizon used to offer 5GB of data on a smartphone for $30; now that same 5GB costs $50.
The carrier has made super-high data users happier by charging a mere $80/month for 10GB, where that used to cost hundreds of dollars in overage, but I don't think anyone's going to argue that $80/month, plus voice, is affordable for most Americans in a recession.
The High Cost of 4G
Verizon isn't alone here. AT&T and T-Mobile are similarly stingy with high-speed data. (Sprint has stuck with unlimited plans in part as a differentiator, but in part because Clearwire's 4G network has massive unsold capacity.) Verizon just has the fastest network and the hot new phone, so its problem is immediate.
The high cost of cellular data also puts the lie to AT&T's promise of delivering rural LTE broadband if it merges with T-Mobile, as I said in a previous column. At current prices, LTE is a horrendously expensive way to get your broadband, even more costly than the frequently-derided HughesNet satellite Internet service. Forcing rural communities to rely on LTE at current rates will keep them second-class Internet citizens, and all of AT&T's promises of lower prices have been vague, nonspecific, and non-binding.
I don't have a bright and happy way to end this column. If 4G broadband is really as restricted as the carriers put on, then its impact is going to be much smaller than anticipated. If consumers still have to switch to Wi-Fi as often as possible to be able to afford their service plans, mobile data innovation will slow to a crawl.
This will actually benefit technology laggards here. If LTE doesn't enable game-changing new uses, the carriers and manufacturers who stick with 3G and instead make their phones and plans cheaper, smaller, and more battery-efficient will gain the advantage over the brave wireless leaders.