Amazon Kindle HD needs FCC OK, could suck up data allotment

Amazon's new LTE-enabled Kindle Fire HD has two early strikes against it: The device has not yet received FCC approval for sale, and once users get their hands on it they may be disappointed in the number of megabytes included in the basic data plan.

Amazon last week introduced the Kindle Fire HD, 8.9-inch large-screen tablet equipped with LTE that will sell for $499 and come with a $50 per-year data plan from AT&T (NYSE:T).

Last week, Amazon introduced an LTE-enabled version of the Kindle Fire HD, an 8.9-inch large-screen tablet that will come with a $50 per-year data plan from AT&T.

Industry observers were surprised to see Amazon announce the product before it has received FCC approval for sale. The company's promotional materials note, "The 4G device has not been authorized as required by the rules of the Federal Communications Commission. This device is not, and may not be, offered for sale or lease, or sold or leased, until authorization is obtained."

An Amazon spokeswoman told Reuters that the company expects the Kindle Fire HD will receive FCC approval before Nov. 20, which is when the company intends to begin shipping the device. Amazon is accepting pre-orders, which is considered unusual because most companies do not even announce major new products without first achieving FCC approval.

The atypical situation could stem from Amazon's lack of experience with wireless hardware, Charles Golvin, a wireless analyst at Forrester Research, told Reuters.

The missing approval likely concerns the LTE modem in the Kindle Fire HD because other Kindle Fire tablets unveiled by Amazon last week have only Wi-Fi modems and promotional materials for them do not carry the FCC disclaimer. "That would indicate that this is related to the new 4G LTE modem," Golvin said.

Amazon has said it custom-designed its LTE modem to be just 2.2 mm thick, so that it could keep the Kindle Fire HD device under 8.8 mm thick.

The device's $50 per-year data plan means the Kindle Fire HD has the most affordable standalone data plan of any LTE tablet on the market. Yet that plan provides customers with only 250 MB of cellular data per month, not counting Wi-Fi access.

"If you want to view 30 or more Web pages, or stream more than four minutes of video, or listen to more than 20 minutes of streaming music per day, that isn't going to be enough," said The Wall Street Journal's Digits blog.

According to AT&T's data calculator, viewing a single two-hour HD movie would use up 614 MB, more than twice the monthly allotment of data included in the Kindle Fire HD's basic plan.

Customers on the included data plan who exceed 250 MB in one month will see their cellular data service suspended until the following month. Buyers can pay extra to get higher data allotments from AT&T, but that service will cost $30 a month for 3 GB or $50 for 5 GB, in addition to a $36 activation fee that is charged for any service upgrades. So, for 5 GB of data each month, the first-year cost would be $636 vs. $50 for the included cellular service.

"That's a real problem considering Amazon is selling the devices cheap in hopes buyers will regularly access its expanding selection of streaming videos via the wireless network," said the Digits blog.

On the other hand, the pricing could lure true gadget geeks to AT&T's new shared data plan, given that they could add the Kindle Fire HD to one of those plans for just an extra $10 each month.

The pricing could also steer users to consume more data via Wi-Fi. Amazon noted that the Kindle Fire HD can automatically switch between the 2.4 GHz Wi-Fi band and the 5 GHz band for better service.

Apple's LTE-equipped iPad faced similar data consumption issues when it was introduced in March. Early users were shocked at how much cellular data they consumed in their first few day of iPad ownership.

For more:
- see this Wall Street Journal Digits post
- see this Reuters article

Special Report: Amazon's Kindle Fire and mobile event: Complete coverage

Related articles:
Amazon's Kindle Fire HD with LTE breaks mold with $50/year data plan
Amazon could announce new Kindle Fire at Sept. 6 event
Report: Amazon to build Android smartphone
ComScore: Amazon's Kindle Fire grabs 55% Android tablet share
Apple's new iPad encourages LTE usage but data pricing may drive users to Wi-Fi
Study: Some Kindle Fire owners disappointed in lack of 3G/4G capability

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