Different plans, different rates
How do they compare?
To compare the different services, I decided to look at the price of 1 Gb of service from each provider at the different plan levels. I ran the numbers two ways: first, I started with an assumption that one would go and pre-pay for more bandwidth than one would use, essentially paying a premium to ensure one would not be charged overages. Let's say I needed 5 Gb of bandwidth, then I would purchase 6 Gb to ensure that I’d be OK. The result is a chart that allows us to see the per Gb price of monthly bandwidth across each provider (bolded prices are the ones where the company actually offers a plan):
Of course, the above data does not provide a complete view in that it does not take into accounts full overages. Yet, it is interesting to note an interesting pattern: Across any given category, Verizon and AT&T are mostly aligned on the low end of the price spectrum. Another surprising result is that the value players (Sprint and T-mobile) are relatively expensive in comparison to the largest guys. On average, across all plans, a customer will pay $11.19 per Gigabyte on AT&T, $10.79 on Verizon, $16.72 on Sprint, and $13.34 on T-mobile.
Overages
But he prices highlighted above only tell part of the story. In order to get a true sense of full prices, it is probably safe to assume that an individual may go over their bandwidth allocation and pay overage fees. While T-Mobile has dropped those charges, AT&T and Verizon both charge users $15 per Gb over plan and Sprint charges an extra $51.20 for the same amount (Sprint’s fees are more granular in that it charges an extra $.05 per Mb). So, assuming you are taking the overages into account, the per Gb price of mobile bandwidth looks as follows (I've excluded T-Mobile here as its does not provide full-speed service once you've maxed out your bandwidth allocation):
Looking at the data, the net impact of overages is mostly felt by Sprint users. Because of the large number of high bandwidth plans offered by AT&T and Verizon, the chances that a user would fall within an overage range are more limited, which keeps their bandwidth prices relatively stable.
Why variable pricing?
This analysis points to an interesting fact: Each provider looks at bandwidth as something that varies in price much like an airplane seat might do. This begs the question: why? After all, delivering 1Gb of bandwidth should incur the same cost for the first and for the last byte issued. Once the investment has been made in installing and powering equipment, the cost of delivering 1Gb of wireless bandwidth should be relatively stable. And yet, the telecom industry has convinced consumers that it should not be the case.
If you were to average the lowest price each of the big 4 charges for 1Gb of data you would get $11.32. If you average how much they charge across the board, that price rises to $13.01. That price gap is fairly substantial and represents a landscape that is wholly unfair to consumers.
What if, instead of charging different prices for the same bandwidth, the largest carrier just decided to charge a flat rate and maintain that rate no matter how much bandwidth a consumer used? But how much should they charge? If you look at their current price models, it looks like AT&T and Verizon can, in the best case, deliver 1Gb of data for $5.50; Sprint and T-mobile do it for $6.67. So these could be starting points: a flat 1Gb price rate, no matter what. The first company to make that kind of offer would revolutionize the telecom world as it would bring a new level of transparency to the industry. The net result would also be lower prices for consumers, which may result in heavier use and the rise of new usage types. And that could help ignite the next wave of successful technology companies in America.
Note: This entry has been updated to reflect recent changes in pricing since it was first published.