The price of your mobile plan may be $1000+ for 2 years.
The cost of your mobile plan is probably $300 for the handset, and $100 for the service.
As you usually end up paying for the customer edge device with connection/first year costs with internet, then you can remove the cost of your handset from the comparison.
Actually, I was hoping that cost and price would at least be near each other. Adam Smith… invisible hand… all of that.
I think you just proposed about a 300% profit margin for my cell provider. I doubt they do that well on me, but that we can believe they do should be a sign that something is wrong in our communication business model.
Personally, I think that if the phone companies are overseen by commissions that restrict their profit margins, then clearly the only way to increase profit is to do everything as expensively and inefficiently as possible. Their actions make a lot more sense thought that lens.
You're at the top end in terms of Average Revenue Per User of your SP (ARPU). USA is ~$60 per month. You're suggesting you're probably in the $100+.
I'd suggest that the costs to your provider over an above the average user are absolutely minimal - a little extra network traffic on average. So if ARPU of $60 yields 30% margin, cost of plan and handset is $42.
Let's say I'm right and 1/3 of your plan is subsidising your handset. We take a further ~$30 from the "cost". We're left with $12/month to support your > $100/month subscription. Sounds about right to me.
EDIT: Sorry, calculated $1000+ for one year... oops.
So cut all those in half: $6 a month to support a $50 a month subscription?
Hmm, I suppose that the same is correct with regard to internet providers? I mean, they build infrastructure, pay salaries, mitigate risks, and still provide orders-of-magnitude better bandwidth. This must be especially noticeable when the same company provides you with internet and a landline phone, using the same cable.
OK, let's assume that 10000x difference is an unfair comparison, because a SIP phone or Skype won't work when you need to call 911 most. Maybe it takes 100 times more investment to provide for this: extra bandwidth, redundant cables and switches, redundant power — all much stronger than a typical datacenter. But even then the phone service would be 100x as cheap.
The 10000x is unfair because it is based on the assumption that cost of service is a multiple of bandwidth, which is completely untrue. The article's entire premise is fiction.
If you want to make a simple linear model of data costs, at least remember that linear means y = mx + b. The article left out b, which is a heck of a lot bigger than mx for phones and typical household consumption.
It's a heck of a lot less than it is to trench in a gas pipe, which presents all kinds of safety hazards and requires a specialized crew, or water pipes, which if done incorrectly could utterly ruin your house.
Installing a copper or fiber line is so simple it's almost impossible to screw up. The cost can't be more than couple of hundred bucks provided there's a feed on the post close by.
No digging. No explosions. No flooding. No requirement to transport valuable liquids or gasses that have to be produced in accordance with strict standards into your house in an on-going basis.
How your bandwidth bill is higher than that of natural gas, piped half way across a continent, is something the telcos should explain.
Wait, the monetary barrier to having fiber is only about the same scale as my two year cell phone contract?