Settle in for the hangover, folks, because the unlimited mobile data party might well end in 2010. While Americans have been enjoying the giddy, anytime, anywhere use of the Internet, social media, cloud-based picture-sharing and streaming video, revenue per megabyte has been falling for operators. And that means we are likely to soon see the end of flat-rate mobile data pricing, across carriers.
Take AT&T Inc., has been famously hard hit by congestion in the access and backhaul networks, stemming from the large amount of primarily iPhone-related data traffic. Ralph de la Vega, president and chief executive for mobility and consumer markets at AT&T, said that 3 percent of AT&T’s smartphone users consume about 40 percent of all wireless data. And the plan is to "encourage" those users to cut back.
“We’re going to try to focus on making sure we give incentives to those small percentages to either reduce or modify their usage, so they don’t crowd out the customers on those same cell sites,” he said.
But failing that, analysts say the carrier could very well move to a metered plan, forcing subscribers that are used to unlimited data to learn the meaning of a megabyte. But does anyone really want to deal with memorizing that one minute of streamed video equals x number of photo uploads to Facebook?
That said, there's more at stake in moving to a metered plan than just a basic business case. It's also at the heart of a competitive shift.
“With growth in voice service revenue having evaporated, the only opportunity for expansion in the wireless business is in data,” said Jagdish Rebello, senior director and principal analyst for research firm iSuppli. “For wireless operators, data revenue growth is essential to fund investments in new network technology that are required to attract and retain subscribers.”
But the lion's share of the smartphone money at stake is actually flowing out of operators' hands.
“With much of the iPhone experience intrinsically tied to iTunes and application downloads, Apple has usurped AT&T’s ownership of these critical users,” Rebello noted. “Because of this, Apple has generated major revenue and margin growth based on its iPhone business – while AT&T largely has been unable to cash in on the growth in data services beyond monthly access fees."
But the issue of subscriber control affects the entire wireless industry, he added: “The fight over which companies will control revenue generated by applications and data services will represent the key battleground in the global wireless business during the next two years,” Rebello said, with companies including Apple, Google, Nokia, RIM and Microsoft facing off with carriers for control. Gaining a hold on wireless data usage and right-sizing the billing accordingly could go a long way to helping carriers' cause, he added.
