19 March 2012

Keeping Connected with Cheap Hotspots

Thirty years ago, it used to be a big deal when the average residential customer got a long distance call on a landline because toll charges were so expensive.  But then the breakup of Ma Bell stimulated competition.  Around that same time, only tycoons tended to have wireless phones, because the technology was primitive and monopolies kept costs high but predictable.  Now you just have to smile when someone rooted in “old school” telephone thinking worries about long distance charges or that it is a mobile phone call.

Just after the turn of the Millennium, cell phone companies began to fight for customers by offering various incentives,  from free long distance, lots of minutes, “rollover” minutes, free cell-to-cell calls etc. to reduce customer churn.  In order to discern the best plan, you needed a couple of number crunchers and a lawyer to understand all the permutations and variables. However, most customers are drawn like moths to a flame for the “new every two” model, which commits them again to the company for 24 months, but their contract terms may be changed as their old plan is no longer offered.

Cell companies looked to maximize their profits by shifting premiums to things like SMS (texting) and data plans.  Younger customers often text much more than they talk on their cell phones, so those footing the bill ought to have unlimited texting plans or else be faced with whopping charges.

The Apple I-Phone accelerated the telephonic demand for data services for customers’ smart phones.  As tablets like the I-Pad and other tablets are replacing laptops for many mobile computer users, consumers want to find ways to keep connected when they are not in an open Wi-Fi zone.  During the recent South By Southwest Festival in Austin, Texas, there were “homeless hotspots” from a baker’s dozen streetpeople who offered Wi-Fi access in exchange for a suggested donating $2 per 15 minutes of access.

It is dubious if most mobile computing users will receive broadband from a vagabond in the near future. Aside from the debate sparked by this South By Soutwest stunt, it calls to mind WiFi security.  Mobile internet data users need to be mindful that available "free internet" off the street might expose their data to unscrupulous cyber Peeping Toms.

There is, however, a burgeoning demand for Wi-Fi access for mobile data users.  Major Cellular Carriers offer plans, which follow the American model of discounting the hardware in exchange for an expensive plan with a hefty early exit fee.  Smart phone users are required to buy a monthly data plan for their cell phones, and perhaps even pay extra for a Hotspot or too "officially" tether their devices.   Moreover, carriers like AT&T and Verizon Wireless have ended their unlimited plans.  Many companies either charge a premium for higher speed connections (LTE or 4G) which has limited, if any, prepaid options. And buying an I-Pad with a radio capable of receiving a 3G subscription will cost about hundred and thirty dollars more plus the monthly 4G subscription.  So savvy mobile computing customers are looking for alternatives.

Netzero (a United Online Company which also owns Juno) is trying to capitalize on the tides of change in telephony to quench demand to cut price mobile data services.  Originally, Sprint had planned to partner with Clearwire (which it owns a majority stake but NOT a controlling interest) in offering 4G service with a WiMax technology using Clearwire’s high speed data network.  In December 2011, Sprint decided to change its tack and sail along with other carriers on the LTE course, which continuing to contract with Clearwire for Wimax 4G.  So fear not Sprint Evo early adapters, your CDMA devices will still work through 2015.

Clearwire needed to evolve their business model with their largest customer shifting away from WiMax.  So it is no surprise that Clearwire’s high speed wireless network was contracted out to another cellular provider. Netzero chose to become a Mobile Virtual Network Operator (MVNO) by partially filling that void in Clearwire’s network.

Netzero and Juno established a scheme of  10 hours of free dial up internet with some banner advertisements.  Presumably, Netzero hoped that customers would be enticed to pay a cut rate amount to get unlimited dial up and a less commercially kludgey web browser.  The plan has worked reasonably well as it has retained 750,000 customers and remains in the internet business to this day, unlike their competitors.

It seems that NetZero is employing a similar model for wireless high speed internet.  Consumers must pay either $50 for a USB dongle for a laptop or $100 for WiFi hot spot hardware that can accommodate up to eight devices.  But consumers can opt for a free 200 MB a month plan which would give about 10 hours of internet browsing, albeit with the Lightspeed (up to 1Mbps down / 384Kbps up)  The NetZero Broadband paid tiers are a basic plan at 500 MB a month for $9.95, a plus plan with 1 GB a month at $19.95, the pro plan with 2 GB of data for $34.95 and the platinum plan of 4 GB for $49.95.  With the paid tiers, customers can choose to conserve data with the Lightspeed or maximize their performance with Warpspeed (up to 10Mbps down / 1.5Mbps up).  Paying customers can change their speed via a 15 minute process on the NetZero website.

Some might scoff at the cost for seemingly stingy for stand alone mobile broadband data services in the price plan.  However, it is an apples-to-oranges comparison as unlike major carriers, NetZero has no contract requirement. The market leaders lock you in for a two year contract which may give you a larger basket of minutes (but not unlimited). But by the time you add in the cell phone taxes, you may look at paying 20% more.  This may not be the case with a pre-paid cellular data scenario, although NetZero customer service was unsure of this feature on their initial offering day.  Other prepaid cellular data services use the slower 3G speed.

Unless a customer is willing to pay an exorbitant amount and is willing to accept slower speeds, mobile broadband is not a total internet access option.  These NetZero plans are not something on which a cost conscious consumer would want to stream “Titanic”.  But the come on rate of “free” for the first 12 months is hard to beat.  Even the NetZero Basic is economically enticing, as it gives 20 hours of web browsing for a ten spot.

With prices so low, NetZero had to cover their costs somehow.  If you require technical support, it will cost you on per minute basis.  NetZero will not accept hardware returns for reasons of bad data coverage, so it is crucial to check to see if there is a signal where you live and where you intend to use the service.  WiMax 4G is a good speed for mobile data but it is not as effective inside buildings, so coverage may be weaker if you are not near a window. There are conflicting reports as to whether one can “top off” an account one month if you approach your data limit and then revert back to the teaser rate.  Considering NetZero’s business model, it is unlikely that you can go back to that promised land, as they surely lose money on each “free” customer.  If you do not want to have tier inflation, a NetZero free customer has to forgo using the service until your limit resets in the next month.

Last summer, between the East Coast Earthquake, a Communication Workers of America strike and customer service ineptitude (“Can you hear me now?"), my household lost high speed internet coverage for 28 days.  That was an eternity in the information age, so we had to find work arounds.  Fortunately, we had a hotspot associated with our cellular phones so we had back up internet coverage which was slower but adequate.  When you do not stream video, it is remarkable how little data was used–it was much more than our average amount but not even approaching data cap levels. So having an inexpensive WiMax backup might be a prudent solution for a technology inclined household.

Another avenue where having an unattached high speed mobile data device is for internet appliances.  Rather than listen to static filled AM radio, I now listen to my information programming on a Logitech Squeezebox which relies on receiving WiFi internet signals.  A mobile hot spot would such a data demand from an internet appliances.  I also acquired a tablet computer when HP bailed out of that market and sold their stock of HP Touchpads at fire sale prices.  It is a great media consumption device but it is also dependent on having an available WiFi signal.  At home, that is no problem but out in the world, unencumbered WiFi coverage can be spotty at best.  When I am out in the field, I may not have access to on-site internet coverage.  But by using something like a NetZero 4G with its complimentary 200 MB a month coverage, I could check my e-mail and surf the web for a half our every work day.

Considering all of the aforementioned caveats, is NetZero 4G service a good deal.? It depends.  If you live in the 80 metropolitan areas and have coverage it may be.  For heavy laptop usage where you are playing Wizard of Warcraft or watching streaming video, it may be too costly for the amount of data within the plan.

If you currently have a hotspot with your cell phone, it would be wise to analyze your data usage over the last several months and consider how your use your mobile internet devices.  Most likely one need some internet plan with a smartphone, but you could save money using an independent hot spot if you have modest mobile data needs for devices like a tablet.  An even more economic approach to get 3G coverage for basic internet is to buy a Kindle Keyboard 3G for  as little as $139 (or $189 without screensaver ads).  It may not be as flashy as the color Kindle Fire, but it does have complimentary internet for the life of the device, which is good for reading non-graphic based websites and checking your e-mail.

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