opinion


Verizon Wireless netbook flags sky-high US mobile broadband prices

Verizon Wireless is the latest US mobile operator to move into mobile broadband netbooks, following AT&T Mobility, but its sky-high prices don’t match the penny-pinching ethos of the netbook segment. In fact the Verizon deal costs $583 more than a similar deal in the UK, and highlights that the US has some of the highest mobile broadband prices in the world.

First some details. Verizon Wireless is moving into netbooks on May 17, when it will launch the HP Mini 1151NR for $200 with a two-year contract, and after a $50 mail-in rebate. The device has embedded EV-DO Rev. A and HSPA, with service plans costing $40 per month for 250MB and $0.10/MB for overage, suitable for light users, and $60 per month for 5GB usage with $0.05/MB overage.  Verizon Wireless has used the netbook launch to tweak its plans, with the $40 plan previously offering 50MB per month and $0.25/MB overage, and the $60 plan 5GB per month and $0.25/MB overage. Those are small steps in the right direction, but it will take a giant leap to bring the US in line with global mobile broadband pricing.

Having moved from the UK to the US not so long ago, I’m continually surprised by the relatively high price of mobile broadband in the US. Verizon Wireless is charging $200 for its mobile broadband netbook, but all the major UK mobile operators now offer them free. Likewise the Verizon Wireless netbook plan is $60 per month for 5GB of usage, compared to, for example, £30 ($45) per month for 15GB of usage from 3UK. AT&T also recently launched a trial where it offers netbooks for $50, but only if subscribers sign up for a $60 per month mobile broadband plan and AT&T’s DSL service.

Just comparing the Verizon Wireless and 3 UK plans, both operators require a two-year contract, so the next step is to look at the total price over two years including netbook and subscription costs. Verizon Wireless comes out at $1,640, which is $583 more than the 3UK cost of $1,087. Put another way, Verizon charges 34% more for a plan with 200% less data usage.

What’s the reason for the difference? It doesn’t seem to be the netbooks, which are broadly similar, particularly when you consider that UK operators offer a variety of fully-subsidized notebooks with various specifications.  However one major difference is Verizon is offering embedded mobile broadband, and 3UK bundles its netbooks with a USB modem.

So the question becomes, is the convenience of an embedded chipset worth $583 over two years? Certainly not for me – I use a mobile broadband USB modem at the moment and it’s pretty convenient, so the price gap would have to be a lot lower to go for embedded.  In addition, netbooks similar to Verzon’s are available for $299 (for example the Dell Mini 10v), and mobile broadband USB modems are often free with a contract, so consumers don’t have to pay much more to put their own package together, with the added benefit of getting the netbook they want.

Another difference is the Verizon Wireless device supports both EV-DO Revision A and HSPA, via Qualcomm’s Gobi chipset, which makes it a truly global device. Of course the much broader coverage of HSPA worldwide means the 3 UK HSPA modem can also be used globally, including in the US, without the need for EV-DO Revision A. At least in theory – I haven’t checked 3 UK’s international plans, though I assume data roaming charges are high. For its part, Verizon Wireless is offering a GlobalAccess plan for $130 per month including 100MB in 30 international areas and 5GB per month in the US and Canada. It will be interesting to see how many jetsetters sign up for that one.

Looking more broadly, the comparison between the two operators seems a fair reflection of overall mobile broadband pricing in the US and UK. In fact the data wizards on our World Cellular Information Service team track mobile broadband pricing by operator worldwide, and their findings are surprising. Basically there are three outliers with unusually high prices—Puerto Rico, the US and Japan—while most other countries tracked are bunched in a similar (if relatively wide) price range.

More specifically, our research finds that in January 2009 the average basic price of mobile broadband services in the US was $92.17 per month, compared to $30.31 per month in the UK. That’s right, the price was more than three times higher in the US.

Of course Verizon Wireless and 3UK are not competitors, and the US and UK are obviously very different markets subject to their own competitive dynamics and regulations. But the scale of the price difference between similar mobile broadband services in the two countries is hard to fathom – and hard to swallow as a consumer.

Mike Roberts is author of Future Mobile Broadband: HSPA & EV-DO to LTE Networks, Devices & Services


One comment

  1. Avatar Mike B. 22/05/2009 @ 1:32 am

    Very informative article. Once again, for good reason, I plan to hold off on purchasing a product and/or plan until further review, more specifically, your recommendations. Thanks in advance.

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