Tag: Congestion pricing

Traffic jam

Starlink Introducing Capacity-Based Pricing

Christian

Starlink just announced it will adjust pricing for residential customers. Service will become cheaper in areas the company has extra capacity, and service will become more expensive in capacity-constrained areas.

Here’s the key bit from the email I got last night:

The Starlink monthly service for residential customers is changing as follows:

  • $10 increase in areas with limited capacity. New price will be $120/month.
  • $20 decrease in areas with excess capacity. New price will be $90/month.

As a current customer in an area with limited capacity, your monthly service price will increase to $120/month beginning April 24, 2023. For new customers in your area, the price increase is effective immediately.

While it’s not great to see my bill increasing, I’m glad to see efforts to tie pricing to capacity in different regions.

Whether we’re looking at cell service or residential internet, the level of network congestion in an area can significantly affect the quality of service customers experience.1 In a somewhat convoluted way, congestion also affects the cost of delivering service.

I find it surprising that services tend to be priced as uniformly as they are throughout the country. Moving away from that uniformity probably makes the market more efficient.

Abstract photo representing wireless technology

Variable-Rate Pricing, Network Switching, and Mobile X

Christian

Urban planners have a joke: “You aren’t in traffic; you are traffic.”

While most people consider how long they’d have to wait in traffic if they travel, almost no one thinks about how much worse they’d make traffic for everyone else.

Conventional tolls charge road users the same rates all the time. Variable-rate tolling is a clever alternative. Under that approach, people pay high tolls when roads are congested. Tolls are low (or non-existent) when roads are wide open. When managed well, variable-rate tolling can lead to huge improvements in efficiency.

Conventional cellular pricing is inefficient

Most of the time, cell phone networks are not at their max capacities. In these situations, a mobile subscriber can use data without degrading service quality for other users on the network or incurring substantial costs for the network operator. On the other hand, network capacity is a precious resource when networks are congested.

With conventional wireless price structures, a gigabyte of data use costs a subscriber the same amount regardless of how congested a network is. There’s a sense in which it would be way more efficient to vary the cost subscribers pay for a gigabyte based on how congested a network is.

With variable-rate pricing, people with money to burn and a need for high-performance could get great speeds all the time. Budget-sensitive consumers could get super cheap data most of the time, then reduce data use when bandwidth is in high demand.

Network switching

If a small town could have its entire population covered by one cell tower, multiple networks may still build towers. In some sense, this is horribly inefficient. On the other hand, it’s unsurprising given the structure of the wireless industry in the U.S. While roaming agreements allowing subscribers to use other carriers’ towers do a lot to reduce inefficiencies like these, the situation is far from optimal. Mobile phone subscribers are at the whims of whatever roaming agreements are in place between network operators.

Imagine an individual T-Mobile subscriber is out of the range of T-Mobile’s network and near another network’s tower. What if the subscriber could pay for temporary coverage from the tower? It’s not an option today, but there’s no technical obstacle making it impossible.

Google Fi uses a form of dynamic network switching that has huge benefits. While Google Fi typically uses T-Mobile’s network, Fi subscribers are automatically switched to Sprint or U.S. Cellular when those networks can deliver better performance.1 Currently, only a tiny portion of U.S. consumers have access to this kind of network switching.

If more carriers embrace dynamic network switching, consumers will benefit. If dynamic network switching is combined with variable-rate pricing, consumers will benefit enormously.

Mobile X

Yesterday, Peter Adderton, the founder of Boost Mobile, began to tweet teasing a new carrier he’s working on called Mobile X:

While the first tweet was vague, it seemed to hint at some of the unconventional features I’d like to see. Today, Adderton shared a more promising tweet:

The image is the part I find most interesting. While I don’t know what Adderton is building, the mockup interface sure looks like it fits with a service that involves both dynamic network switching and user-selected levels of service quality.