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Kurt Hanson: Data prices keep getting cheaper and cheaper

kurt hanson aboutPicking up my morning iced venti soy latte at the Starbucks at Randolph & Wabash this morning, I walked by the nearby T-Mobile store and was surprised at a new promotion they were offering:

According to the poster (as shown below), they’re offering a family plan of four lines, each with 10 gigs of data per month, for only $30 per month per line. Truth be told, I’m informed by their 800 number that that special offer ended on Labor Day, but today’s price is still only $35 per month per line. Which is still pretty impressive.

Assuming that unlimited talk and texting alone is worth, say, $20/month — that’s fair, right? — that would mean that each family member is paying only $1.50 per gig for their 10 gigs of data. Furthermore, unused data rolls over and can be used for a year, plus T-Mobile throws in an additional free 10 gigs of data into the “available to be rolled over” bucket.

At RAIN Summits in recent years, I’ve been pointing out that data costs are getting cheaper and cheaper, using $5 per gig as a marginal price that’s already really comfortably low. Seeing T-Mobile going down to $1.50 per gig is taking things to a whole new (lower) level!

Furthermore again, any member of the family can add an additional 10 gigs to their line for an additional $10 per month — which is a price for that second tranch of only $1 per gig!

This kind of pricing really makes listening to online radio on a mobile device practical and affordable.

How affordable? If a mobile device user listens to an online radio brand that streams at 64kbps (as I believe, for example, Pandora does), and they listen 20 hours per week, which is historically about as much as the average American has ever listened to AM/FM radio, they would only use 2 gigs of data per month. (Here’s the math, if you’re interested: 64 kbps times 60 secs./min. times 60 min./hour, divide by 8 to change bits (b) into Bytes (B), multiply by 20 hrs./wk. and by about 4 weeks/mo.)

Under this T-Mobile pricing plan, a consumer’s online radio listening would only cost perhaps $3/month. (Of course, keep in mind that if the consumer isn’t using all of their 10 gig package anyway, it’s effectively no increase in cost at all.)

And also keep in mind that a huge percentage of the time one spends listening to streaming audio is probably when one is on a WiFi network — whether at home, work, or Starbucks — so you don’t need to use any 4G data at all. If half your time is on a WiFi network, then reduce that $3/month to $1.50/month.

And furthermore, some webcasters (like AccuRadio) stream to mobile devices at 32 kbps (which sounds pretty good, thanks to the AAC+ V2 codec, on typical consumer headphones). So that would bring that $1.50/month down to 75¢/month.

If you’re a broadcaster thinking that online radio has a challenging future due to the high cost of data, I’d urge you to think again: If we’re seeing pricing at the 75¢/month range (and declining!), I suspect that, in the long run, that’s not going to be much of a roadblock to adoption.

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Kurt Hanson

2 Comments

  1. Not to mention that some mobile providers don’t count streaming music against your data plan. T-Mobile alone includes over 30 music services which you can to without utilizing your data plan. It’s an interesting space to watch as these types of offers have raised questions about how they bump up against Net Neutrality laws.

  2. Just contracted with AT&T for unlimited text and data for $20 per month on two phones. That’s $10 per month per phone. Free is coming soon.

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