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Finding a Data Cap That Fits

Phil Harvey

8:00 AM -- I doubt wireless service providers will move to pay-per-bit or usage-based billing anytime soon. Having tiers of service where consumers pick how much data they think they'll use is more productive for the bottom line. Consumers want to avoid penalties and bill shock, so they often buy a higher, more expensive tier that allows for more data than they'll actually use in a given month.

That was the main point I made on a recent appearance on TIA NOW, the video service run by the Telecommunications Industry Association (TIA) , starting at about the 5:00 mark. Click here to see that video.

Of course, we're seeing data caps in wireline networks, too, as broadband providers are slowing training consumers that there is no such thing as all-you-can-eat broadband, since so much compelling content is being consumed outside the confines of what's offered via popular pay TV services.

Consumers may not like data caps, but they'll be with us for a while. Why? They seem to be the only way operators can assure their shareholders that they will grow the amount of revenue they can get per user even after the customer is purchasing the highest available speed on the network. Add and change the tiers at will, impose ludicrous fees for "unlimited" plans and you can force consumers to buy a little more data each time.

While we're talking about this, what service provider plan do you like the most? Which one suits you best or offers what you think is a solid bargain?

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— Phil Harvey, Editor-in-Chief, Light Reading

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12/5/2012 | 5:23:29 PM
re: Finding a Data Cap That Fits

AT&T and Verizon are hardly hurting revenue-wise now are they? I can see people grumbling on the boards every day about the ever-changing plans and caps. Do the big two have such a captive audience that they can constantly push up prices? Will people stand for it?

12/5/2012 | 5:23:28 PM
re: Finding a Data Cap That Fits

Correct. I think investors are the key constituent for publicly-held telcos. 

Investors want to see growth even in saturated markets. The only way to get growth out of a relatively fixed subscriber base is the jack around with fees, broadband charges and pricing.

Interestingly, policy and charging changes can help increase average revenue per user (for the most data-hungry users) while helping other customers pay less for using less.

So I think the formulas will keep changing and consumers will have to be more vocal about what is working and what's not.

12/5/2012 | 5:23:27 PM
re: Finding a Data Cap That Fits

You make a really good point, but consumers also have more options than before. I think if AT&T and Verizon keep making data pricing changes like they have, their customers may start to look more seriously at Sprint (as long as it keeps unlimited), T-Mobile and maybe even these new MVNOs that are launching now.

12/5/2012 | 5:23:25 PM
re: Finding a Data Cap That Fits

I think the cost to consumers to churn, especially smartphone customers, is really high so it will take more than an all-you-can-eat data plan at a competitor option to make most people switch.

Also, i wonder how many "new" customers to MVNOs are just getting a second phone for personal use, a side business, etc. Given that the TIA is predicting 110 percent wireless penetration in the US by 2015, it seems there will be enough room for dozens of different approaches to data pricing.


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