How can Google do it so cheaply?

[pgoelz]

I know no one can really answer the question, but I have to wonder...... how can Google resell me Tmobile and Sprint service for less than half what those carriers would charge me? Never mind the free international roaming or the other features like free additional data SIMs.

I am very curious to see what the big three (Verizon, ATT and Tmobile) do to counter competition from Fi in the coming year. How is it in their best interest to sell service to Google for a fraction of what they could get for it from their own customers?

Paul

 

[mogelijk]

I tried tackling this question once and did it poorly, so I gave up. But the simple answer is that Project Fi is not really that cheap -- particularly if you compare it to accounts with multiple lines. Businesses can get T-Mobile lines with 1GB of data for something like $25 each -- with all the benefits that individual customers get. If I go to T-Mobile's website, I can get 4 lines for $100 with 1GB of data -- $25 per line -- and that price per line goes down as I add more lines (6 lines is $120, $20 per line).

Of course, Google isn't just reselling lines -- instead they rent time on both the T-Mobile and Sprint networks -- but they still rent the usage on those networks cheaper than you can buy a plan through T-Mobile or Sprint. They likely do pay a basic amount for each line, likely with the unlimited talk and text, which is the reason for the $20 talk and text charge per month. Then, because they are renting time on both networks and only paying for usage, Google can turn around and apply that same kind of mentality to Project Fi users.

 

[pgoelz]

I guess the real question I didn't quite ask is.... if it is in ATT's interest to sell that service to Google (a competitor), why don't they just sell it to me (a 20 year CUSTOMER) directly at the same or LOWER cost and keep me as a customer. I have ragged on ATT for years about their high cost and it has only been with the rise of Tmobile that ATT has dropped their prices somewhat. In fact, I have been reasonably happy with the cost of my ATT 2GB service and the coverage is better than Fi in the boonies. The only reason I decided to try Project Fi was to get the free Canadian roaming (I live close to the Canadian border and sped time there each year)... plus I was curious and wanted a N5X for cheap. So I signed up for Fi and then discovered the very next day (by accident) that ATT now offers unlimited voice and text in Canada AND 1GB of high speed Canadian data for free.... you just have to ask them to add it to your account.

I still wish ATT would offer data to me at the same rate they wholesale it to their COMPETITORS though. Makes no sense not to....

Paul

 

[mogelijk]

I guess the real question I didn't quite ask is.... if it is in ATT's interest to sell that service to Google (a competitor), why don't they just sell it to me (a 20 year CUSTOMER) directly at the same or LOWER cost and keep me as a customer. I have ragged on ATT for years about their high cost and it has only been with the rise of Tmobile that ATT has dropped their prices somewhat. In fact, I have been reasonably happy with the cost of my ATT 2GB service and the coverage is better than Fi in the boonies. The only reason I decided to try Project Fi was to get the free Canadian roaming (I live close to the Canadian border and sped time there each year)... plus I was curious and wanted a N5X for cheap. So I signed up for Fi and then discovered the very next day (by accident) that ATT now offers unlimited voice and text in Canada AND 1GB of high speed Canadian data for free.... you just have to ask them to add it to your account.

I still wish ATT would offer data to me at the same rate they wholesale it to their COMPETITORS though. Makes no sense not to....

Paul

AT&T prices their service at the cost they think will make them the most profit -- there is a reason they are nicknamed the Death Star. It is also worth noting that AT&T doesn't sell data to Google, I don't believe -- I believe Google merely gets the advantage of T-Mobile's roaming in some areas. Though most of it still comes down to scale -- the more service you buy the cheaper it is, which is partly why MVNO's like Straight Talk can offer AT&T service for cheaper prices than you can get from AT&T.

Of course, AT&T even gives cheaper options with prepaid, though with some services cut out. For example, Cricket Wireless (fully owned by AT&T) is relatively cheap and even offer Canadian roaming on their $50 (5 GB) and higher plans.

 

[pgoelz]

AT&T prices their service at the cost they think will make them the most profit -- there is a reason they are nicknamed the Death Star. It is also worth noting that AT&T doesn't sell data to Google, I don't believe -- I believe Google merely gets the advantage of T-Mobile's roaming in some areas. Though most of it still comes down to scale -- the more service you buy the cheaper it is, which is partly why MVNO's like Straight Talk can offer AT&T service for cheaper prices than you can get from AT&T.

Good grief, I don't know what I was thinking when I questioned ATT selling service to Google. I'm an ATT customer and totally forgot that Google buys from Tmobile, not ATT Same question applies though.... maybe it is a question of scale, but I just don't see how it is in Tmobile's interest to enable Google to poach their customers. Just curious is all.

Paul

 

[Channan]

$30 plus taxes and fees for unlimited talk and text and only 1GB of data isn't THAT cheap. The thing that sucks about Fi is you have to get unlimited talk and text, which is something I don't even use (or rather do, but I use Google Voice, so it goes through data). If they just offered data-only plans at $10/GB, that would be awesome.

What's hard to believe is how RingPlus makes any money. I have a RingPlus plan with 4000 minutes, 4000 texts, and 4000MB of data every month, and all it cost me was $15 for the SIM card, a $29 top up that's just used as account credit, and a few dollars in taxes and fees, and I get 4000 minutes/texts/MB for free every month.

So basically what it costs for just one month of service on Fi with 1.5GB of data, I get more minutes and texts than I'll ever use, and just under 4GB of data every month with RingPlus. They use Sprint, so you don't also get T-Mobile coverage, but I'll take that for free every month.

 

[pgoelz]

I'm left wondering if the real reason Google can do it cheaper than the two carriers they buy service from is that...... they CAN'T. They could easily be subsidizing their service with low initial rates to build their customer base.

Paul

 

[ca_steve]

I'm left wondering if the real reason Google can do it cheaper than the two carriers they buy service from is that...... they CAN'T. They could easily be subsidizing their service with low initial rates to build their customer base.
Paul

I think it's the other way around - the carriers subsidize phone purchases which gets absorbed into the (higher) monthly bill. As phone subsidies fade, there's more flexibility in the rate structure. All in all, the carriers charge more because they can. If there was a widespread drop in their subscriptions, then you'd see lower rate structures.

 

[anon(5356006)]

Fi really isn't that cheap. For $30 on Fi you get 1GB of data, for $30 on T-Mobile you can get 5GB of data (although with only 100 minutes), and with AT&T you can get 10GB of data for $55/mo.

 

[ansextra]

The only reason it "seems" cheaper is because you're only paying for actual data usage. Other plans build in a lot more data. Fi is essentially ala carte. If your data usage is low then Fi is great. If you use alot of data Fi is no bargain.

 

[pgoelz]

For me, Fi is indeed cheaper because I don't use much data. But yes, I can see that at 3GB of actual usage per month, Fi and ATT are about the same.

I was very interested in switching to Fi because of the free roaming in Canada. I live near the border and spend a couple weeks in Canada each year and ATT was raping me for any usage in Canada. But I discovered about a day after I activated my Fi service that ATT now has free Canadian roaming with 1GB of full speed Canadian data.... you just have to ask them to add it to your account. So now I need to decide whether the ~$20 less per month for Fi (for me) is worth the somewhat poorer coverage in the boonies. I'm thinking not..... but I'm grateful for the $199 Nexus 5X

Paul

 

[Mtn_Scott]

Retail vs. Wholesale, when was the last time you saw Fi Marketing. You would be shocked to know the marketing budgets of Tmo and sprint.
'nuff said.

 

[Almeuit]

The only reason it "seems" cheaper is because you're only paying for actual data usage. Other plans build in a lot more data. Fi is essentially ala carte. If your data usage is low then Fi is great. If you use alot of data Fi is no bargain.

This. Fi is cheap for low data users.

 

[BattleSwine]

It works for me. On of my stepsons caused a data overage on my Wife's VZW family plan.... it cost an extra $30. I decided to see what going over my 1GB Project Fi plan would cost.... $0.38 more. I can live with it.