When it comes to mobile data, it’s all about what you’re prepared to pay

ONCE upon a time, as mobile phone users we knew we were charged 25 cents to send a text and somewhere around 20-30 cents per minute to make a local call.

The cost to the telco provider for each text or call was vastly less, but people understood the relationship. It was the
early days of personal mobile phones, it was all pretty simple - people played snake and learned how to use predictive text.
But the advent of the internet-enabled smartphone has completely overhauled the relationship customers have with their device, and by extension, their telco provider.These days it’s all about data.* news.com.au is partnering with Australia’s biggest consumer network to launch The Big Data Switch Campaign - a people-powered campaign that will reduce the cost of mobile and broadband data. Join the campaign here.
As a result, companies are increasingly moving to relatively inexpensive voice and text messaging packages while adding more expensive pricing schemes around data.
So are we getting ripped of by today’s data packages?
Most of us have at least heard a horror story of a customer getting stuck with an enormous bill for going over their data allowance.
Such instances were much more common in the early days of mobile data packages. For instance, in 2010, using a second gigabyte (GB) of data on a Virgin mobile plan could have cost the customer 140 times more than the first gig, and the user wouldn’t have realised for days.
Exorbitant excess data rates were once a major money spinner for Australian telcos, but are largely a thing of the past. Companies such as Telstra, Optus and Vodafone have all brought in measures to avoid cases of ‘bill shock’ and most plans now add an extra GB of data for $10.

Looking at your mobile phone bill after blowing your data limit.Source:Supplied

The move has dramatically reduced the overall cost customers pay for data. For example, less than three years ago, Optus charged 25c per megabyte for excess data usage, which amounted to $250 for that extra GB.
While most customers today can expect an automatic top up for $10, those not on a plan can face slightly more expensive prices. For instance, Telstra charges three cents per MB for excess mobile data without a data pack, which works out at $30 per GB.
If the pricing seems arbitrary, it’s because it largely is.
“There is no direct correlation between the cost of data and what we pay,” telecommunications expert Paul Budde told news.com.au.
Instead customers are paying for the infrastructure and administrative costs of companies such as Telstra when they fork out for data — something Mr Budde refers to as “the legacy cost”.
When it comes to what we pay for mobile data, it’s really determined by marketing and industry competition, he said.
Telstra’s Group Managing Director of Networks, Mike Wright, told news.com.au in September that telcos base their data inclusions in your plans around how much they think their networks can handle without slowing down.
Upgrades to infrastructure such as Category 11 4G, introduced by Telstra last year, “let more phones on the network to download at higher speeds than ever before, allowing data costs to go down,” Mr Wright said.

If Netflix were streamed constantly, the network wouldn’t work too great.Source:Foxtel

At the moment, if everyone had unlimited mobile data and was constantly streaming high-definition Netflix, the networks would grind to a halt. However the recent free data days put on by the company show their network is capable of handling a huge jump in data use.
The notion that the cost of data is linked to the capability of a telco’s network is one that Mr Budde refuted.
Updates and improvements to the efficiency and capacity of the network are a way for telco companies to bring down their own costs, but will not necessarily impact on what customers pay for mobile packages, he said.
According to him, it’s all about “what we’re prepared to pay”.
“Competition, not technology dictates the price more than anything,” he said.