The carrier coup must be stopped


Let's say one contract offers a free netbook with unlimited data for $150 per month, another offers a $150 netbook with 100GB of data for $70 per month, plus $5 for every GB after the maximum, or a $250 netbook with 60GB of data for $40 per month, plus $7 for every GB after the maximum is reached.

This set of options is complex far beyond the consumer's ability to rationally evaluate them. People don't know how much data is on the Web sites they normally visit. They can't calculate the trade-off between the netbook discount and the monthly mobile broadband charges. The result is paralysis, followed by a decision based on grasping at the package that seems least complex.

If they choose the "free" netbook plus unlimited service, they end up paying $3,600 for two years of data. How much did the netbook cost At these rates, the carrier could pay the netbook maker $500 for a netbook they would otherwise get only $300 for, and it may cost them, say, $2,000 to provision the wireless data access over those two years. That means the carrier is making $1,100 on the sale of the netbook. The consumer is paying $1,300 for a $300 netbook.

If the consumer chooses the plan with the lowest monthly cost, but the lowest maximum for data, he could end up paying even more. Much more. Adam Savage, star of the TV show Mythbusters, says for "a few hours of web surfing in Canada." He's now leading a pressure movement to force carriers to provide customers with the information they need to predict how much their data usage will cost. The carriers don't want to do this, however, because accidental overage charges are very lucrative.

This profit is the direct result -- the reward, if you will -- for presenting the consumer with more complexity and uncertainty than a human brain can handle.

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