After getting a taste of Verizon’s free 4G hotspot feature on my HTC Thunderbolt, it was disappointing to lose the capability when the free trial ended and the $30 price kicked in. But, as I said then, there’s no way I’m adding a hotspot fee on top of my existing 4g data plan. I pay for a fixed amount of data. Why should I have to pay just to share it with other devices too?
The reason is because telcos want us using as little of our available data capacity as possible. As GigaOm reported yesterday, Juniper Research has released projections that show wireless delivery costs going up 700% from 2010 to $370 billion by 2016. That could put a serious dent in profits, even with revenues forecast to hit $1.1 trillion in 2012.
It’s similar in many ways to what’s happening with wireline ISPs. A source at Comcast once told me that the operator would be in serious trouble if a significant number of people signed up for its 105-Mbps speed tier – hence the reason it’s priced beyond most household budgets. In the cable operator’s case, significant increases in data usage would require massive capex spending for network upgrades. In the wireless world, it sounds like the issue is more about operating expenses, assuming 4G network upgrades are already accounted for. What both have in common, however, is a tension between balancing capacity costs with demand and revenue. And until competition tips the scales in the future, our wallets aren’t going to get a break on data plans. Long live free public wi-fi.