Exclusive Report: Out with the old, in with the new mobile data plans
By Sam Masud
Connected Business Research, the new research arm of
Connected Planet, has released the results of an exclusive survey
exploring mobile operator plans to move beyond unlimited data plan
pricing.
At the risk of being indelicate, permit me to put a salacious spin
on it: having seduced us, they now tell us it's going to cost us more.
The "they" in this case are the mobile operators; the “it” is the price
for mobile broadband data access. The all-you-can-eat model, as many had
presciently noted, has become a victim of its own success.
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Indeed, if Cisco's Visual Networking Index for global mobile data
traffic is on target, then video traffic this year, for the very first
time, will constitute a majority of all mobile data traffic. Increasing
mobile broadband speeds combined with a variety of more powerful mobile
devices are putting pressure on mobile operators' bottom line, forcing
them to consider other pricing options for subscribers.
Addressing this challenge,
Connected Business Research (CBR), the newly-formed market research arm of Connected Planet, has released a report on mobile data usage. The report, "
Mobile Data Usage Billing Trends,"
is CBR's inaugural study. Based on feedback from more than 300
respondents to an on-line survey, we are clearly heading into a time of
great change. While usage-based billing, either with or without
subscriber contract, is the most popular way mobile operators currently
charge for data, a super-majority of operators are definitely, probably
or possibly considering changes to data plans next year. For a large
number of operators, tiered data plans are the way they would prefer to
charge, and a significant but considerably smaller number favors dynamic
pricing (e.g. based on network load) or pricing based on the service
(e.g. Netflix, YouTube). Here a few other things the survey found:
· Factors such as network technology or spectrum do not have much impact on operators' desire to change billing plans
· Smaller operators don't lag too far behind big operators in
offering multi-device data plans for individuals or families
· When it comes to changing billing plans, technology
readiness/cost and regulatory considerations are much less important
than market perception and competitive considerations
The last point is particularly important. Few things affect
customers more than being told they'll either have to pay more or cut
back on usage. That means that operators that want to change their
billing plans have their work cut out for them. And that, in my view,
will be a particularly tricky task.
Here's why. First, user demographics are changing. Right now,
according to Cisco, the top one percent of mobile data subscribers
generate more than 20% of mobile traffic, down a whopping ten percentage
points from a year ago. Usage is likely to become even democratized in
the years ahead, and so will access to smartphones, tablets and other
mobile devices. Also, connected tablet traffic will grow. Then there is
the ubiquitous laptop--Cisco estimates laptops generate 22 times more
traffic than the typical smartphone.
Operators considering change of billing plans will have to
keep in mind that an increasing numbers of users will become bandwidth
hogs even as an increasing number of users have multiple devices that
can connect to the network. Tailoring data usage plans without making
them overly complicated is the challenge operators face in the
fast-shifting mobile environment. The battle for data subscribers is
only now starting to get into high gear and, as they say, we ain't seen
nothing yet. Badly tailored data plans could very well snip an
operator's revenues and profit and boost a competitor's market share.
For those interested, there is much more detail — including an
executive summary and the full table of contents – in the Connected
Business Research report on "
Mobile Data Usage Billing Trends.”
