The "mobile internet" concept is a huge fraud foisted on Canadian consumers. Wireless providers in Canada have managed to convince thousands of people that that they need to be able to browse websites and check email on their mobile phones and PDAs, and then they charge them astronomically outrageous rates for doing so. Just as soft-drink companies have convinced many consumers to pay $1000/L for water that they could get from their tap for free. Prices are so totally out of line with the actual cost of providing the service that Ted Rogers is now Canada's second-richest man.

stolen bike a good example of cell phone data charges

photo credit: Dan4th

How bad are these rates, anyway? And how much higher are they than the price you pay for wired internet service at home or work? Let's take a look.

Over the past 12 months, I've transferred 189 GB over my home cable internet connection (I downloaded 140 GB and uploaded 49 GB). My cable bill is $43/month, or $516 per year, so that works out to $2.73/GB transferred. Cable internet is a flat-rate service, so the more you use, the cheaper it gets on a unit basis. If I had been a light user and transferred only 1 GB per month, I'd have been paying $43/GB.

Another feature of cable internet (and likely ADSL internet as well) is that there's no explicit limit to the amount of data you can transfer, and I've transferred up to 50 GB in previous months. That's not the way it is with wireless internet.

Now let's look at what the wireless providers charge. None of them provide a flat-rate, unlimited plan for data transfer to smartphones or PDAs. The providers do provide not-unreasonable rates ($65-$100/GB) for transfers via PC cards connected to a laptop computer - but that's not really the mobile internet. Have you seen very many people checking their email on a laptop while standing in line at the supermarket?

At first blush, the "pay-as-you-go" rates charged by the providers seem reasonable. Why, only 3 cents per kb! The problem of course is that no one consumes data in kilobytes. That's like saying that Nestlé will sell you water at 10 cents per thimble-full... at that rate, a small bottle would cost you $5. Similarly, we should note that 5 cents per kilobyte is $50 per megabyte, or $50,000 per GB! So these prices are actually 1,000 - 25,000 times higher than you would pay for high-speed cable internet. And guess what? The wireless providers actually use cable to move your data from tower to tower; the only part that's wireless is the last few metres from the tower to your phone. And since they buy bandwidth in bulk, their actual cost is pennies per GB. Not a bad markup, eh?

Maybe you think 1 MB is a lot of data, and you wouldn't possibly use that much in a month. I tracked my wireless data usage over a month using Efficasoft's GPRS monitor. I use a smartphone that runs Windows Mobile 6, not a Blackberry, so my email program has to actually go and check periodically if there is any mail (unlike the Blackberry, which automatically just sends you new mail when it has it). I set the timer on my work account to 15 minutes and on my home account to 30 minutes, and only downloaded new headers and 1 kb of message content, via an IMAP connection. After a month, I'd used over 100 MB just checking my email and clicking through on the occasional web link in an email. I didn't download any videos or music. Had I been paying by pay-as-you-go, my bill would have been $5000!

If you buy a data plan from a provider, your rate will will be slightly lower. For instance, you can you can spend $80/month on Rogers for a paltry 200 MB. Viewing just one graphics-rich web page (like a news site) can use up 1 MB, so that 200 MB allows you to view just 6 web pages per day on your smartphone or iPhone. And the rate for going over that limit is punitive - if you actually used 1 GB, you would pay $4280! (versus $2.50 - $50 for the same 1 GB on your home cable connection).

The situation is so bad, it's as though the credit card companies were charging 1900% interest per month. What's worse, the cellular data providers actively conspire to trip you up and hit you with a punitive bill. None of them provide any tools to enable you to monitor your data consumption. Nor will they send you a courtesy note when you've used the MB you purchased under your monthly plan. Every provider I've asked says they have no way to tell you how much data you've used. But strangely enough, they are able to measure to the kilobyte your data consumption when it comes time to sending you the bill. It's as though you've rented a car in a country where none of the cars have speedometers, but the penalty for speeding is to be bludgeoned to death by police.

Some of you will defend the providers and point out that they provide "unlimited mobile browsing" for $7-15 per month. I say: read the fine print. Most of the providers will only allow you to view certain WAP sites using those plans. That is, you can't just to go any website you want - you can only view a few, mobile, versions of some sites. And even then, only if you use the crippled little browsers that run on the tiny screens of your cell phones. If you want to use a smartphone, or PDA, or iPhone, with a real browser and a larger screen, you'll find you can't use these plans. And also when you look more closely, there's language that clarifies that 'unlimited' is nothing of the sort, and that if you go over some unspecified limit, you'll be financially bludgeoned when you get your bill.

Many people think these rates constitute legalized theft, and wonder how the providers can get away with it. In the neighboring US, rates are substantially lower (for instance, you can get 5 GB of internet data from Verizon for $60/month - that's just $12/GB), and in Europe rates are lower yet. Why are we paying so much? It's because our federal government has allowed a monopoly situation to develop. We used to have two GSM providers (Rogers and Fido), and the Competition Bureau never uttered a peep when Rogers bought Fido. As for competition between Telus and Bell, the two CDMA providers, well, they cooperate heavily in services and infrastructure, and their rates are, not surprisingly, virtually identical. Since you can't use a CDMA phone on a GSM network, nor vice versa, there is in fact no real competition between providers. If you want to switch, you have to throw away your phone.

Another example of dishonesty practiced by the major providers is the "system access fee", which ranges from $7-9 per month. The providers used to pretend that the government was forcing them to charge this fee - until a lawsuit, I believe - so now they're admitting, usually in small print, that "this is not a government fee". So what is it? Just a way to mislead consumers about the real cost of their cellular service. That so-called $20/month plan is actually a $29/month plan. It's as though you saw a car for sale for $20k, and when you went to pay for it you are told there's a "road access fee" of another $9k on top: your purchase doesn't look so cheap any more, does it?

So what's a person to do? You have several options. Firstly, don't use your phone for web browsing! Or if you must, get your employer to pay for it (though that might get you fired when the bill comes in). Or, buy a smartphone that has WiFi, and only make internet connections when you're in a coffee shop. Or buy the "unlimited mobile browser" plan and only use for emergency situations (like you forgot your cousin's phone number but you know it's in your GMail inbox somewhere). And lastly, take every opportunity you can to pester your MP to demand legislative action to end the financial rape of Canadian consumers.

Until the situation changes, the mobile internet in Canada is just another form of "stupidity tax" like the government lotteries. The more stupid you are, the more you use it and the more you pay.

Just one day after I wrote this article, there’s a rumoured leak of a set of new lower-priced Rogers data plans for PDA and Blackberrys. While I’d like to take credit for this, it’s unlikely Rogers marketing staff are reading this column very closely.

Many readers of the forum posting where this supposed leak appeared are already complaining that the rates don’t go far enough. But one thing these new plans would do is provide predictability, and reduce the fear of a financial bludgeoning that exists if you go over your allowed limits on the existing plans. For example, whereas under Rogers’ existing data plan you would pay $80 for 200 MB, but an astounding $4280 if you actually consumed 1 GB, under the new plan you would pay $50 for 200 MB, but only $65 if you actually used 1 GB.

Far from costing Rogers money, these new plans may actually increase its profits as people actually begin to feel they can truly use the mobile internet without fear of losing their home and their car just because their teenager got ahold of their phone for a couple of hours of downloading.

Here are the details of the supposed new plans coming March 18th 2008:

Unlim WAP = $7
Unlim Vision WAP = $7 - 3 yr term with DECF (data early cancellation fee)

Blackberry Data Plan - 3 yr term with DECF
$15 - 10MB BIS/BES ~ Tier 1
$30 - 10MB to 50MB BIS/BES ~ Tier 2
$50 - 50MB to 200MB BIS/BES ~ Tier 3
$65 - 200MB to 500MB BIS/BES ~ Tier 4
$0.05 per additional MB

Note: Everyone starts off at the $15 plan and based on usage, you move up the tiers.
e.g. If you use 11 MB, you pay $30, if you use 51 MB, you pay $50. If you use 1.5 GB, you pay $115.

Non-Rogers phones (e.g. unlocked iPhones) & Windows Mobile Data & Tethering - 3 yr term with DECF
$15 - 20MB ~ Tier 1
$30 - 20MB to 60MB ~ Tier 2
$50 - 60MB to 500MB ~ Tier 3
$65 - 500MB to 1GB ~ Tier 4
$75 - 1GB to 2GB ~ Tier 5
$85 - 2GB to 3GB ~ Tier 6
$100 - 3GB to 5GB ~ Tier 7
$0.03 per additional MB

Note: Everyone starts off at the $15 plan and based on usage, you move up the tiers.
e.g. If you use 61 MB, you pay $50. If you use 6GB, you pay $130.