The true cost of mobility

John Parikhal and Taran Swan are founders of 'The Media Fix', a group that helps organisations stay on top of change, anticipate opportunities and take effective, competitive action.

With their permission we reprint their article, originally titled 'why cbs will love acura – for a while) about the true cost of mobility. Whilst from an American perspective, it is an insight into where we may be heading with in-car wifi.
 

The dirty little secret of the mobile revolution is that real ’mobility’ is expensive. Very expensive. And, the jury is out as to whether the consumer will pay.

Here are the facts.

There are basically two kinds of mobile. Wi-Fi and Wireless. For Wi-Fi, you have to stop moving and sit or stand in your home, a Starbucks, an airport or any other Wi-Fi enabled hotspot.

In other words, it’s not fully ‘mobile’. With true Wireless, you’re free to move and take your entertainment with you – but you have to pay a wireless carrier like AT&T or Verizon. And you pay them a lot.

If you’ve got a smartphone or an iPad, you know the wireless drill. At least $30 a month for a ‘data plan’ which is likely to be capped at 2-3 Gb. Verizon is $30 for just 2 Gb. If you use more than your limit in a month, you pay another $10-12 per Gb for data.

To put this in perspective… if you listen to Pandora (or any radio stream, even your favorite local station), you use about 1Gb for 40 hours. In other words, about 1 1/2 hours a day. If you watch about 75 YouTube videos, you use 1Gb. As you can see, it doesn’t take long to hit your data cap. And, at 4G speeds watching HD, you hit it even faster.

So, once you go over your data cap, 40 hours of radio costs $12. That’s 30 cents an hour. Or, it’s 16 cents for a YouTube video.  It can add up fast.

And these numbers raise a big question … have the automakers thought about this as they unveil the 2013 cars, many of which are loaded with bluetooth connections so that your wireless device can run through their dashboard? Have they thought about who’s going to pay to receive all this data?

Honda just announced a deal with Aha for a data heavy service in their new cars. Others, such as Ford and General Motors are right behind.

And that’s why companies like CBS Radio are going to love Acura – because it won’t be long until consumers are hit with huge data bills for using wireless in their cars. For many of them, terrestrial over-the-air radio might start looking like a bargain again.

And, this won’t just hit cars. More and more, broadband providers are throttling data speed at home which affects your Wi-Fi. Once you reach about 5Gb, they slow you down so much that Netflix begins to look like a choppy movie.

But, for companies like CBS and Clear Channel, data caps are a sword that cuts both ways.

The tough part for CBS with Radio.com and Clear Channel with iHeart radio is that their streaming services are also going to cost the consumer money, especially those who listen a lot.

So, terrestrial radio and TV will benefit from data caps on one hand and be hurt on the other.

This elephant in the room isn’t going away. It will be interesting to see the reaction of Acura, among others, when car buyers discover the price of on-demand, one-on-one media.

John Parikhal and Taran Swan are founders of 'The Media Fix', a group that helps organisations stay on top of change, anticipate opportunities and take effective, competitive action. You can visit their website here.