Is cheap unlimited mobile data an endangered species?
Posted by Jaco van Rooijen
More and more people have smartphones; some studies suggesting around 40% of the Dutch population (and for example 27% in the USA). These phones are often bought in combination with a 2 year subscription that includes a voice and sms text bundle and which subsidizes the price of the device itself. And for a nominal fee per month, the subscription includes unlimited, fast internet access. Some internet providers have a fair use clause in the contract which allows them to restrict someone’s access speed after they have been deemed to use more than their fair share of the total internet bandwidth.
Those smartphone users have different usage patterns than what the mobile operators were used to. They send mail and read news on their phones. They download games, full length videos and music content. To stay in contact, they use instant messenger applications like WhatsApp to send free messages to their friends. And use VoIP (voice-over-IP) applications like Skype to make voice or even video calls. The operators’ subscription packages were structured around voice and sms traffic, but all these smartphone applications make use of the cheap internet connection only.
The mobile operators are investing large amounts on expanding their networks to cater for this growing data traffic need of their subscribers, but the subscribers were paying less and less for the subscriptions and only making heavy use of the data connection. The next natural step? The big three mobile providers in the Netherlands started talking about and/or slowly implementing ways to block certain types of data traffic. Or if they could not block it, force the users to pay more for the privilege to use those services. However, political outcry put an end to these ideas. The new telecoms law introduced a new concept called net equality and prohibits the operators from asking differential prices for different types of data.
It is adapt or die time for the operators and one by one they are now introducing new price structures. In much the same fashion as we saw the introduction of sms bundles when operators were loosing revenue in the voice area, they are now starting to talk about data bundles to recover from lost revenue in the voice and sms area. A €10 unlimited internet subscription seems to be an endangered species. Smaller, slower and cheaper data bundles were introduced in the lower end of the market. The current unlimited high speed data connections can still be bought for the high end, video downloading and file sharing users, but at a rather staggering price point.
There are questions being raised though; none of the operators are very open with sharing information about how much data really is consumed by the users. No-one is entirely sure how big a data bundle they should be buying when they upgrade their subscriptions again. The consumer should not trust the operators to decide which data bundle fits their usage pattern when the same operator is not forthcoming with accurate usage statistics. It is early days; and the operators will have to come to the party at some stage.
The consumer / smartphone user is not entirely at the mercy of the operators though. Smartphones have more processing power than most home computers had only 4 or 5 years ago. They can be used to measure and process call and data usage information. There are some applications that private smartphone users can install on their own phones for this purpose.
However, in the corporate and enterprise space, there is an opportunity in this market for accurate usage measurements and billing estimates. This opportunity is called Real-Time Telecoms Expense management. In a future post, I will explore this opportunity a little bit more.
