The Trouble with Virgin Mobile Broadband2Go

As is the trend in the ISP industry, the price of bandwidth is going up, so nickel and dime tactics become a more central feature of business models everywhere. In Virgin Mobile's case it takes the form of a "speed cap." I expect customers' threats to go elsewhere are little more than face-saving bluff, and most will eat the de-facto price increase. Demand for bandwidth, it seems, is like a gas, in that it automagically fills whatever space of whatever shape. In that regard it is like autosprawl—no amount of road-building will bring the end of traffic jams.

The empirical question is, is this the result of exogenous market forces such as an unavoidable traffic jam, or a structural increase in the price of bandwidth, or is it a case of operators milking the business model more aggressively? Is it still the case that one's ISP dollar goes significantly farther practically everywhere outside the United States? Is it still the case that the non-US market features much more competition in prepaid services, and much more willingness on the part of network operators to work with 'unlocked' mobile devices? Having never had much opportunity to travel, I have to take other people's word on such matters.

Is there some Iron Law of Economics to the effect that prepaid services are more expensive or otherwise less of a value for the money than postpaid? If there's any truth to the Time Value of Money, than logically, the opposite should be true! Since the market for postpaid services consists pretty much by definition of people with steady-eddie enough income and cash flow to commit to at least a two-year hitch (what my mom calls 'established' people), the prepaid market can justifiably be thought of as in some respects a captive audience. Does the difference in value between prepaid and postpaid offerings reflect anything beyond 'because they can?' Hopefully inquiring minds will somehow devise an empirical study of these market behaviors.

And on a tangentially related note, what's this cock and bull story the Social Security Administration is telling our elders about the non-inflationary times in which we're supposedly living?

Here's the email from Virgin Mobile, just to give you the reader a taste of the tone:

Hey Lorraine,

Here at Virgin Mobile, our mission is to deliver an outstanding customer experience. Sometimes that means making difficult choices in order to provide the best possible service to the greatest number of customers.

To make sure we can keep offering our $40 Unlimited Broadband2Go Plan at such a great price, we're putting a speed limit in place for anyone on that plan who uses over 5GB in a month.

How will it work?
Starting February 15, 2011, if you go over 5GB in a month on the $40 Unlimited Plan:

* Your data speeds will be limited for the remainder of the monthly plan cycle. During this time, you may experience slower page loads and file downloads and lags in streaming media.
* Your data speeds will return to normal as soon as you buy a new Broadband2Go Plan.
* This change will only affect plans bought on or after 2/15/2011.

How will it affect me?
Keep in mind, 5GB is A LOT of data. To give you an idea, it's about 250 hours of web browsing or over 500,000(!) emails*. So this change shouldn't affect you unless you're a heavy downloader/streamer/etc.

How will I know if I'm getting close to 5GB?
We've updated the progress bar in your Connection Manager to show the amount of data you've used. If you go above 5GB in a month, the bar will turn yellow, letting you know your data speeds will be reduced until you buy a new plan.

By putting this speed limit in place, we're making sure we can deliver the same quality service you've come to expect from Broadband2Go. We hope you understand.

Thanks for being a Broadband2Go customer.
Virgin Mobile

* Data usage per activity is based on an average. Actual usage varies depending on the types of websites, video, email and other internet applications accessed.