Thoughts on Inconsistencies in Internet Pricing

I recently had the pleasure of getting an iPhone4. I say it was a pleasure because unlike some I think that it’s a high quality device and that the upgrades on the model make it worth the $299 more that it costs over the older model. I’m sure I’ll have some future posts that expand on that subject, but all of the above helps explain the events that brought me to write this post.

The new iPhone4 has wirelessN networking, which is supposed to be an improvement over the wirelessG that the 3G & 3GS iPhone were equipped with. In theory the wifi speeds should be much much faster. I had also read that many people were experiencing faster ATT 3G network speeds with the new phone, so I thought I’d run some speed tests to see for myself if they had indeed improved.

What I found was not as exciting as I had hoped from an iPhone perspective, but what was interesting/depressing was more related to the speed/prices of the services I was testing with the iPhone.

As far as speeds of wifi on a device level I found that there was no real improvement in speed using wirelessN over wirelessG. To run the test I simply ran consecutive speed tests on an iPhone4 and then on a 3GS. The speeds were the same.

The results themselves were what was most interesting. The speeds of my home vs. AT&T’s 3G network vs. my office were all different. Let’s start with the fastest, which was my home connection.

Home, Sweet Home

My home connection had really good speeds, considering the price paid. I pay $45.00 a month to Comcast and they’ve only given me crap over bandwidth usage once, and that was because I decided to infinitely seed 30+ HD movies. That month I shared over 600GB of data, and Comcast doesn’t really get upset until you get over 250GB. That seems reasonable to me.

I had always known that my home connection felt fastest of the three items we’re discussing, and the test confirmed that. By how much though? Let’s take a look at that.

AT&T

The next speed test I ran was on AT&T’s 3G network. I can definitely feel that using my phone on a wifi connection is fastest, but I’ve always been pretty happy with the data service that AT&T provides. Here’s where they came in: 547kbps is not very fast, but I feel like that is on the low side of they’re service. On average they are around 600-650kbps in my area, and while that is 10 times slower than my home connection, for something that works all over the city, It’s not too bad.

I get good coverage with them, I’ve travelled all over the US and they really do have one of the most reliable networks available. I pay something like $90 a month for their service, but $20 of that is dedicated to unlimited texts (which is a HUGE rip-off), and $30 of it goes to phone calls, so $40 for the data service isn’t too bad.

The downside with their service is that their “unlimited data” is in reality very limited. It caps off at 5GB, which is far from unlimited, and now that the iPhone4 shoots HD video and 5MP pictures, I think that data is going to become a precious commodity. In fact, AT&T is encouraging most customer’s to downgrade to a 2GB month plan, stating that most people don’t go over that. Nobody points out the fact that those averages were gathered from people who were using iPhone3G’s and iPhone3GS’s, which take 1.3MP and 3.0MP pictures respectively. I forecast overage charges to lots of iPhone4 customer’s in the future.

Enough on that tangent though. I think I’m subconsciously trying to avoid the results of the third test because it get’s me a little angry ;).

Work Connection

Starting with the positive points, you’ll notice that my work connection is faster that a 3G connection.
That’s about where the good ends though. As far as bad goes, there is much.

A Little Background…

I own my own business. We distrubute Kitchen Cabinets all over North America, and that requires a lot of space. Because we need lot’s of space, there are few buildings that are large enough to accommodate our needs. The building we operate out of is in a very well established Industrial park in Kansas City, MO. The building is about 25 years old. Cable provider’s refuse to run wire into the area, because the businesses there are so big, they would have very few customer’s (vs. a residential neighborhood where there are lots of homes).

This normally wouldn’t bother me, I mean I don’t want (nor do I want my employees) watching cable television during the work day, but the other side of that means no reasonable internet pricing.

My company pay’s $1800.00 a month for a 6MB per second connection supplied via multiple copper T1 lines serviced by Birch telecom. You’ll notice the speed test for my work connection came in at 2290Kbps. That’s because there are multiple computer’s all using the network (and therefore bandwidth) at once.

In simple terms I pay:

• .00813 cents per kbps at home
• 7.3 cents per kbps to AT&T
• 30 cents per kbps to Birch at work

I guess it’s not so big a deal for me and my business. We (right now at least) can afford the price we’re paying for our connection. I do think that this type of pricing will lead to the death of small to mid-sized telecom companies though. With Land Line’s quickly becoming a nostalgic memory, as soon as a cheaper alternative (cable or other) comes to compete with telecom companies in remote and low population areas, no customer base will be left for them to rape and pillage.