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Comment by tkahn6 | Hacker News Reader

This is a no-brainer. As others have pointed out, this is a wholly artificial fee. You still have to pay for the data. They're just charging you for how you access the data.

Basically it's extortion.

Here's something that congress should do. Telecom companies are government-granted monopolies. Why not acknowledge that it's already not a free market situation and cap the profit margin that these companies are allowed to operate at (like they're doing with health insurance now)?

It's insane that 5GB bandwidth/month is $50. It's insane that text messages are so expensive. It's insane that the fee to enter into a new 2-year discounted phone contract isn't proportional to the amount of money the company has recouped on the original phone.

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They do it to segment their customers. A lot of us startups do it too when we offer one plan for $9 per month, another for $19 per month. The delta isn't necessarily because our costs are different, but rather because the value to the consumer is different.

You could argue that cellular networks should only be allowed to be dumb pipes because they are a government-granted monopoly (of spectrum). That would put them in a similar place as a utility like your electric company, sort of quasi-private but heavily regulated.

That makes sense, but OTOH utilities are notorious for stupid bureaucracy and being slow to evolve... So would they still deploy new stuff like LTE quickly? Would they still subsidize phones?

I'm not sure of the answer, but I think that's what the real debate should be if you don't want them creating "artificial fees", ie segmenting customers by value.

> Would they still subsidize phones?

Is subsidizing phones actually a good idea?

To me, it is one features of the US mobile phone market that looks particularly unhealthy. For instance, the subsidy is biggest reason cellular networks can start messing around with what you can and can't run on your phone in the first place. Otherwise, if you didn't like how your carrier crippled your phone, you'd wouldn't buy your phone from them (at least for AT&T and T-Mobile, though I suspect competitive pressure would drag Verizon, Sprint and the rest along, for the most part).

I agree it's probably not a good thing to have subsidies "baked in" by the carriers.

Look at how Chile privatized most of their infrastructure. Basically, the government grants a private company portions of the infrastructure, and they are given specific goals and timelines to upgrade the structures. If they stay on track and meet their goals, they are allowed to keep the profits. If they fail, other companies can bid on the infrastructure, finish the improvements, and capture the profits.

On the other hand high bandwidth prices slow down adoption, usage and evolution for all other industries which uses these telecom services. The rest of the economy is held back by these prices.

I would argue that the benefits of low bandwidth prices for the rest of the economy outweighs the benefits from the current telecom profits.

How much cheaper would it actually be?

> So would they still deploy new stuff like LTE quickly? Would they still subsidize phones?

GSM was developed and initially deployed mainly by the old european government telecoms before privatization took hold in Europe.

I don't place wireless data access on the same level as health coverage.

I use Sprint which has unlimited data and unlimited data is a very good sign that competition still exists in the wireless market. Once it goes, perhaps it will be time to start thinking about even more regulation.

I'm not some free open market type either. I'm pissed off about "Obamacare" only because it doesn't go far enough.

Limiting profits limits incentives to innovate. We probably don't need innovation for healthcare middlemen. We do need innovation and profits for healthcare providers as well as telecommunications companies.

Yes that's a good point. You could stipulate that some percentage of revenue must be spent on R&D and tie that to the profit margin over a multi-year period.

My concern is that the fees being imposed on consumers are instituted just because they can be and because competition is artificially limited, not to generate revenue so they can provide better service to consumers/attract new customers.

Like I said, it's already a non-free market in the telecom sector; just a matter of how deep down the rabbit hole you want to go in terms of regulation and dictation.

I don't pretend to know what the best course of action is... just spitballing.

Tethering charges came out of corporate and at the time tethering often significantly increased the data usage of the device.

And no you didn't always pay for data per KB plans often included tethering while "unlimited" plans charged extra.

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