$20,480 per Gigabyte!!!


Here’s a great example of where cost vs. pricing is completely out of control.

I have a BlackBerry for work. I travel quite a bit in my job. My travel is primarily within Canada and the United States. Living in Canada, I needed a phone plan that included North American long distance and roaming, as well as data access throughout North America.

Clearly with a BlackBerry, data access is critical.  I do try to minimize the data I access with it where possible. I don’t open big email attachments with it, and I have turned off image download when browsing websites.

I spent a few weeks this summer in the US. I got my bill and was surprised to see data overage charges amounting to about $40. I have a data plan with a 1 GB limit and I know I don’t even come close to that amount in a given month.

When I called my service provider to ask about the overage charges, the CSR said that my data plan only applies to Canada and that when in the US, there is a charge of about $1 per MB of data usage.

This was surprising for two reasons:

  1. I have a fairly expensive plan that I thought covered all my my North American dialing and data
  2. $1 per MB is $1024 per GB of data!!!

Think about that one a minute.  About $1000 to wirelessly download 1 GB of data when I’m in the US. I didn’t realize electrons and radio waves were that expensive! Thank goodness I turned off the image download when browsing the Web.

When I expressed my surprise to the CSR about the extreme cost of this, he said that I was actually getting a discount on my US data access because of an option I had purchased with my data plan.

Without that option, the cost would be $20 per MB. Yes, that is twenty dollars per megabyte, or over $20,000 per gigabyte of data! WTF??

I said in shock, “Are you kidding me? That’s completely ridiculous!”

He started a sentence where he was going to tell me how expensive it is for them to provide the service. In mid sentence, I asked him to stop because I really didn’t want to hear whatever excuse he was going to give.

I know this cost of $20 per MB is artificially high because the companies want to extort incent people into getting additional service options, and (at least in Canada), the lack of any effective competition and incentive makes Canada one of the most expensive countries in the world for cell phone rates.

honda accordBut really? $20,000 per Gigabyte??? I could buy this car for about that much money?

So, if you’ve got about $20,000 burning a hole in your pocket, give it to me(!), or go to your nearest Honda dealer and get a new set of wheels.

Or, make sure you DON’T have a US data plan with a Canadian cell phone provider, go across the border with your Blackberry or iPhone, and then click this link, login, download and look forward to your next phone bill.

Saeed

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6 responses to “$20,480 per Gigabyte!!!

  1. When I moved to Minnesota, I went the AT&T store my very first day there and asked for a local number. I was very used to having two numbers on my phone. Rep didn’t know how to do it!

    What bunk. GTE never had a problem. After a month of roaming charges, I went back and was told to dial 611. Finally, I got a local number. Then, a few days later, I moved back to Texas, and was roaming again.

    Extort is the correct word.

  2. Henrik Kenani Dahlgren

    I work within telecom and I am aware of the cost that the operators have for your 20 000$ Data transfer…

    When seeing the margins I wonder why people deal with coke… this is far better margins and not illegal.

    Starting the 1st of april EU citizens will enjoy a 50 € cap for data services, this to avoid the 20 000 USD bill after one week of vacation, however this is not very easy to implement, since it will cause the operators to change… and teleco’s generally hate change =)

    great post and a good blog!

    • I know that telecom costs have traditionally been high in Europe, but it seems like they’ve really progressed over the last 10 years.

      There also seems (at least from my distant vantage point) to be a lot more consumer protection in Europe than here in Canada when it comes to predatory pricing or business activities of large companies.

  3. Wow! Just insane how we here in Canada get hosed on our telecom rates.

    • And new entrants in the market won’t change that, as they’ll either be marginalized or bought out by the larger firms.

      The government has to be brought to realize that high telecommunications costs are a huge barrier to business and innovation. The US is our biggest trading partner, yet there are so many barriers placed upon Canadians when trying to do business with/in the US.

      Roaming costs are but one small example of this. High data costs in general, whether mobile or not, are another factor. And it’s all the more ironic (and sad) given the rich history of telecommunications innovation in Canada.

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