How carriers make most of their profit these days and why mobile data is so lucrative for Verizon and AT&T

April 30, 2012
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    Verizon and AT&T, the nation’s biggest mobile carriers, just reported their most recent quarterly earnings and, as expected, represented periods of financial growth for the giants.

    It is a known fact that a large part of the revenue that Big Red and AT&T are making these days come from mobile data plans, but what’s interesting is that, in the wide majority of cases, people pay for data they aren’t actually using.

    According to a very insightful study conducted by Cisco, the average amount of data used per US smartphone in 2011 was 150MB per month. This year, it is predicted that only 100 million smartphones will surpass 1 GB of monthly usage. However, most Verizon and AT&T customers go for the 2, 3 or 5GB monthly plans, which is mostly due to how the two carriers are choosing to “conduct business”.

    Big Red is charging nowadays $10 for 75 MB of data, $30 for 2GB, $50 for 5 GB and $80 for 10 GB. AT&T’s tiered data plans are somewhat similar and the starting plan includes 300MB of data at the “low” price of $20. After that, there’s a huge gap before the second plan, which includes 3GB and costs $30, while a 5GB monthly plan equals $50 of your hard-earned money.

    The average user uses 150 MB a month, but if you’re a Verizon customer, you can either go for the 75 MB plan and risk not having enough data to suit your needs, or go for 2GB and have some huge “leftovers” each month. That doesn’t sound really fair, now does it?

    Well, unfortunately, these two mammoth companies don’t seem that interested in fairness, which is why they are making it look like they are helping us by offering those 2, 3 and 5 GB plans for such “sweet” prices compared with their most basic offerings. Of course, most customers think they are actually getting a great deal when paying 30 bucks for 3 gigs, whereas in reality it’s very difficult, if not impossible, to actually use all that data in one month, Therefore, one can’t say that they are really saving money, but rather losing dough.

    A solution to users’ leftover data problem would be for carriers to introduce rollover bytes that can be used within a certain period of time, much in the same way ‘rollover’ minutes work. However, such a decision oriented towards actual user’s needs would most likely cripple one of the operators’ most important cash cows and we wouldn’t want such a thing to happen, would we? Right then, carry on.

    How about you? How much data do you usually use a month? And what plan are you on currently? Do you think that the carriers should change something when talking about data plans structuring? Let us know in the comments section below!

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    Comments

    • Cole Raney

      I used to go through 2GB a month of data. I would get texts from AT&T saying that my usage is getting close to 2GB and I would refrain from using data for the rest ofthe month. I don’t get how the average user only uses 150MB. Is this including feature phones? People with smartphones use considerably more data.

      • AppleFUD

        For a lot of people they only use gps, IM, email and light web use. Most “average users” are NOT hard core internet users and generally don’t have much of a clue about anything tech and that includes what’s available on the web thus they are using a smartphone as nothing more than a glorified feature phone.

    • WestIndiesKING

      i am still on my 25 dollar unlimited internet and 400 text message plan for t-mo

    • http://yellowrex.com YellowRex

      I used 1.5 GB last month, but the two months prior were 0.8 GB and 0.4 GB. My brother’s usage is similar, but he didn’t go over 1 GB in the last three months.

    • Tim

      I seldom go over a few hundred MBs as well. I have an unlimited plan from before the tiered packages were introduced. The major difference for me is that WiFi is available in my home and at my office. Since the WiFi is typically faster and less daunting on battery life than the 4G VZW offers I stay on WiFi as much as possible and allow smart actions to disable my data connectivity while I am on a WiFi connection.

      I would imagine that most consumers with WiFi in their homes use that instead of their mobile data connection due to higher speeds and not having to worry about taking a hit on their data usage.

    • http://www.facebook.com/profile.php?id=17001583 Bill Badnaruk

      Wasnt it determined that users with 4glte were easily surpassing their data caps by streaming HD content?

    • Flyonrr

      I used 33 gb last month and with a few days left this month I’m at 21 so far. Thankfully I’m still on an unlimited plan.

      • tBs_Battousai

        :-o
        on what?!?!?

    • Spear0209

      I usually use about 3.5 gb of data on tmobile each month

      150 mb is pretty much not using your phone even app updates are often 15mb, a picture is 3.5 mb

      Might as well only have wifi

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