Why do broadband providers sell “internet speed” while mobile data providers sell “internet amount”?



I noticed all broadband deals come with how fast the internet is and all mobile data deals come with how much internet can be used up. I am aware that the amount of broadband data for a household can be huge and 3G/4G speed can be less than perfect, but that does not mean those cannot be modified to specific consumers by the providers to my understanding.

So, what is the catch?

In: Other

Both entities both care about speed and data limit. However, the general assumption is that you wouldn’t be downloading that much data on mobile vs home. So, the speed is what is advertised for home. You’re going to be downloading but look at how fast you can.

The fine print still has limits.

I pay for 1gb down. My data limit is still 6tb though.

I couldn’t hit that even if I had Netflix.

* If a home customer wants super fast internet, the ISP can install whatever equipment it needs between the customer’s house and the ISP’s central office to make that happen.
* Once it’s in place, it stays there, and the customer pays the ISP enough extra money to cover the upgraded equipment and to earn a profit.
* A cell phone customer will be moving around and constantly changing which cell site they connect to.
* The cell company cannot possible guarantee that customer a certain speed at every single cell site they own across the country.
* Charging based on data usage on the other hand is easy to do.
* Also some ISP are moving to that model as well. Home users in many parts of the US face a 1 TB cap each month. If they go over that cap they get charged more.

A cellphone can’t guarantee an internet speed. But at the same time, ISP have discovered amazing new ways to separate you and your money by making you pay for “Services” that should just be part and parcel of providing internet.

Broadband providers run a wire to your door so they can control the actual speed and make some level of commitment to that. Many (most?) still sell a quantity of Internet, but it’s usually very high and difficult to max out through normal use (browsing, email, movies etc…)

Mobile providers can’t reasonably set a speed because it’s very dependent upon where you are physically, relative to the tower, and it can change if you walk 10 feet to the right. They brag about higher speeds overall, but really don’t sell specific rates because people would complain when it does run slower. Since wireless bandwidth is a shared medium, *more than wired*, they also have lower data limits than wired so that’s the figure they “sell”.

The airwaves are a finite resource. There is only so much bandwidth you can put over a radio channel. Wired on the other hand is more plentiful. If you need more bandwidth you add another wire/fiber.

This is actually a very interesting question to solve. It requires thinking about the differences in the competitive markets for home internet vs. cellular internet.

Fact 1 everyone has to understand is that the marginal cost of providing an extra 1GB of data transfer is practically zero, whether you are talking about landline or cellular. Yes the ISPs need to build out the capacity to handle peak bandwidth demand, but once it is built the marginal cost of actually transferring each GB is nearly nothing. Some people will make the argument that metering by data transfer reduces peak bandwidth demand and therefore *does* save the ISPs money, but that is an incomplete answer because it only justifies metering during peak periods, it doesn’t justify metering at the same price per GB during off-peak hours when there is plenty of available network capacity.

Here is my best guess: The marginal cost of installing an additional user with a landline is relatively high vs. the marginal cost of starting up a cellular user is low. With the landline, for each customer you need to wire the “last mile” to the house, which can cost the ISP thousands of dollars. With cellular service, you need the same amount of cellular towers regardless. You need to cover your service area and one additional phone doesn’t really add a marginal cost. *A lot* of marginal phones might require you to upgrade the equipment at your towers, but that is still cheaper than establishing the towers in the first place, so it’s a sharply decreasing marginal cost per additional customer. **This means that charging people upfront for unlimited service could be better aligned with the business model of the landline internet business, which has to make enough revenue off each customer to justify their investment in the physical infrastructure. Whereas a cellular customer doesn’t add any marginal cost, so if the new customer only pays for 1GB that is fine to the cellular ISP, it is all profit to them.**

I wish is could get my money back from Verizon Wireless for their spotty crappy coverage in Southern California.

A class action lawsuit for false advertising would be nice, just to teach them a lesson.

For mobile data, the truth is not in some technical reason. It’s simply this: they want to sell you something, but they don’t want you to actually use it.

They want to be able to advertise “the fastest speeds, the best coverage, etc”, but they know that if everyone actually used the service at the same time, it would be extremely slow (just like if everyone who had a gym membership actually showed up, there would not be enough equipment). So they place an artificial limit (i.e. data cap) on how much of it you can use, knowing that it will cause people to reduce their usage out of fear of going over the limit. The data caps also gives them an artificial thing they can sell you more of to make more money.

Currently mobile data providers have limits in their wireless towers, kind of like when your shower has less water pressure when someone flushes the potty because you only have so much water. That’s why when a lot of people are in a single location that doesn’t normally have a lot of people, your phone doesn’t work very well. To compensate for the limits, mobile data providers make sure everyone uses less than a certain amount so there’s enough for everyone most of the time. Each provider is using the same types of wireless towers, since they are really expensive and complicated, so they pretty much all have the same speed for type of service (3G, 4G LTE, etc).

Broadband providers set the max speed that you get in your home based on how much total capacity their networks have to serve you and your neighbors, most of the time. Thinking about water again, if you have a big pipe, you can provide more water to more people most of the time than if you have a small pipe. If everyone flushes at once, your water pressure goes down, but I digress…

5G should make this less of an issue.

The catch is that the broadband providers can promise their speeds but typically hide data caps behind those promises. Mobile data providers can promise their amount but are embarrassed by their speeds… Well more/less its practical speed.

See the LTE chip in your phone and the cell tower could be as fast as they want to be. But your cell provider needs to throttle down your actual bandwidth to make room for everyone else using LTE, therefore you get about 30Mbps as opposed to the theoretical 750Mbps (correct me if I’m wrong) that LTE can carry.

The dumbest part of data caps for residential accounts is that the more you actually use your high speeds, the quicker you hit your limit and begin racking up overage fees.