Cell Carrier Data Plans

Last week we discussed the need for smartphones to use Rideshare’s service and whether or not they should be accounted as a “cost” under our economic model. I think we’ve covered that pretty well, so here was our conclusion in a nutshell: the only marginal cost Rideshare might impose would be the need for some people who do not currently have data plans to get them. To examine what effect that would have on our analysis of Rideshare’s appeal to our members, I did some research on cell phone data plans.

Rideshare uses a low-data volume app, so we are not going to be consuming Gigabytes of data the way the Netflix or Pandora apps do. Most carriers have reduced price data plans for relatively low intensity users like that. Sprint is the only exception, as they only offer one tier of data: Unlimited, at full price. However, because unlimited data is such a large part of the Sprint brand, very few people who do not have data plans on their phones are likely to be found there, so very few Rideshare members who didn’t already have data plans and decided to get them for our service would likely be found at Sprint. The lowest cost 3G/4G data plans each carrier offers are:

AT&T: $20 300 MB $20/300 MB
Verizon: $20 1 GB $10/GB
Sprint $30 Unlimited Not Applicable
T-Mobile $10 200 MB $0.10/MB

Either of the two largest networks(AT&T and Verizon) charge $20. T-Mobile is the cheapest, but also the smallest carrier with the smallest national network. However, since Rideshare is a service dedicated to arresting traffic gridlock in cities, T-Mobile’s lack of coverage in rural areas isn’t really an issue. Presumably someone who doesn’t already have a data plan is going to be a diligent cost shopper and keep the expense to a minimum, so let’s use T-Mobile as the baseline.

Adding $10 to the monthly cost of Rideshare’s service translates to adding $0.40 per day, on top of the $10 that the average Rideshare passenger will pay. While a 4% increase in price is higher than zero, it is a relatively small cost component in the grand scheme of things. And this is assuming that all of Rideshare’s members need to buy a new data plan solely for the purpose of carpooling that they otherwise wouldn’t purchase, which obviously isn’t true. The actual number of our members who fall into this category is surely much smaller. Even half sounds way too high, but that alone would cut the average daily cost of a new data plan down to $0.20 a day, only 2% of costs.

Even assuming for arguments sake that a small number of our members may need to purchase data plans, Rideshare is not the only use for such plans, and thus should not be accounted all of the accompanying cost. That same data plan will also be used to get work done while the passenger is driving, by allowing them to communicate with coworkers via email in the car and even send completed or pending documents to coworkers and supervisors for approval or revision. This could potentially save them up to 10 hours a week of time at the office they can instead spend on personal activities. Even assuming all our members made minimum wage(they don’t), the time value of those savings would be $4,000 a year. And that is well worth $10 a month for a small data plan.