Tag: Wireless pricing

Did Google Fi Shoot Itself In The Foot?

Christian 39 Comments

Google Fi has a lot going for it: amazing international roaming options, fancy network-switching technology, and a simple pricing structure. Despite all Fi’s great aspects, I don’t usually recommend it. For most users, it’s just too expensive. Google Fi typically charges $10 per gigabyte of data. A lot of other carriers offer plans with far lower rates for data.

All Fi subscribers have roughly the same plan with the same pricing structure.1 There aren’t ten different plans with different names and policies. This is in sharp contrast with Verizon. Looking at just unlimited plans, Verizon has several options:

  1. Start Unlimited
  2. Play More Unlimited
  3. Do More Unlimited
  4. Get More Unlimited

In fact, Verizon actually has a fifth unlimited plan it offers as a prepaid option. Each unlimited plan is a bit different. Some of the plans have more limits than others—inviting critics to joke about how Verizon doesn’t understand the meaning of the word “unlimited.”

While it feels silly, there are a handful of reasons why it makes business sense for Verizon to have several unlimited plans. Today, I’ll only touch on one of those reasons: when a carrier has multiple plans, it’s easier to introduce new prices and policies without immediately affecting existing customers. We just saw Verizon do this. A month ago, Verizon was offering three postpaid, unlimited plans. They were different from today’s plans:

  • GoUnlimited
  • BeyondUnlimited
  • AboveUnlimited

When Verizon introduces new plans, it can cease offering old plans to new customers while offering existing customers the same service on legacy plans. Since there are several plans that all have different policies, it’s difficult for people to make simple, apples-to-apples comparisons between legacy plans and plans available to new customers.

Back to Fi. Google Fi has been charging almost everyone $10 per gigabyte for a long time.2 Years ago, that was a decent price for data. Today it’s not. Data costs have gone down in most of the industry.

I don’t have any inside knowledge about Fi, but I’m suspicious Fi’s simple pricing structure makes it hard for the company to change its prices. If Fi wanted to offer new customers data for $5 per gigabyte, existing Google Fi subscribers would want that deal too. If existing subscribers had to continue paying $10 per gigabyte, they’d get angry. If Fi reduced prices for existing subscribers, Fi’s revenue would plummet.

Added after publication: The idea I share in this post probably doesn’t explain why Fi charges so much for data (or at least, it is probably an incomplete explanation). There are a lot of other plausible explanations. E.g., Fi’s agreements with network operators may not lead to Fi getting good rates on data.

Added even later: When I said I don’t usually recommend Google Fi, I didn’t mean to imply that Fi’s prices are uniquely awful or that no one should use Fi. Rather, I don’t typically recommend Google Fi since most consumers can find comparable service at a lower price (see carriers I recommend).

Is Google Fi Worth It?

Christian

Google Fi uses an admirably simple pricing structure. A base rate of $20 per month offers subscribers unlimited talk and text. Beyond that, users are charged $10 per gigabyte of data. Single-line plans are capped at a monthly charge of $80, so subscribers that use 6GB of data will pay the same monthly price as subscribers that use 10GB of data.1 While I like the simplicity of the pricing structure, plans end up being fairly expensive. It’s my impression that Google Fi has had its current pricing structure in place for several years despite the cost per byte of data dropping in the industry at large.

Fi-enabled devices have technology that allows them to switch between T-Mobile, U.S. Cellular, and Sprint’s networks. While the technology is cool, I’m not sure I’d choose seamless switching between three networks with mediocre coverage over exclusive access to Verizon’s more reliable network.2

Fi now officially supports devices that are not Fi-enabled. When these devices are used with Fi, they’ll only have access to T-Mobile’s network. Many mobile virtual network operators use T-Mobile’s network and offer far better prices than Fi. For example, Mint Mobile’s plans blow Fi’s prices out of the water.3 Even with a Fi-enabled device, I think most people can find a better deal. A light user would pay $30 per month before taxes and fees for texts, talk, and 1GB of data on Fi’s network. You could get the same unlimited texting, unlimited talk, and 1GB of data with Verizon’s prepaid service for $30.4 RedPocket can offer those resources on any of the major networks for $19 per month.5

For heavy data users, the case against Fi is even clearer. Using 6+ gigabytes of data brings the Fi monthly bill to $80 before taxes and fees. At that cost, I expect you could purchase an unlimited, postpaid plan with any of the Big Four carriers.

Despite my negativity, I’m still a huge fan of Fi’s simplicity and remarkable international roaming policies. Hopeful Fi will revamp its prices in the near future to become more competitive with the other options on the market.