Mobile operators face a number of game-changing challenges, including an explosion in data usage, as handset vendors corner the market for applications. Plans to deal with these issues could prove to be a boon for users, but also stand a chance of annoying them.
It is clear operators are barely coping with huge increases in data traffic, and the situation is only going to get worse as waves of new smartphones and tablets appear, according to Shaun Collins, managing director at market research company CCS Insight.
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Technology such as Wi-Fi and femtocells, as well as network improvements like fiber backhaul and the rollout of WiMax and LTE (Long-Term Evolution), will help clear data-transmission bottlenecks. But operators also need to directly address the source of the problem, and that means putting controls on data traffic to throttle demand, Collins said.
Operators including AT&T in the U.S., KDDI in Japan, and Vodafone in Europe have all underlined the need for new pricing schemes that address heavy users of mobile data. But there have been few details on what that would actually mean.
Subscriptions will come with more controls, limits and payment parameters, expects Richard Webb, directing analyst at market research company Infonetics. Some heavy users are going to be disappointed because they won't be able to do what they used to, or will have to pay more for what they used to get, Webb said.
The flip side is that the changes will probably benefit normal users, who today run the risk of having their access slowed down, for example, by people who download music all day, Webb said. New controls and payment plans may allow normal users to get better and more consistent access, while having the option to pay for a higher priority when desired, he said.
One of the ways operators seem to want to tackle the data issue is by using quality of service mechanisms to offer differentiated classes of mobile broadband subscriptions, similar to an airline that allows travelers to choose between economy, business or first class, according to Webb. Wireless users in a lower class and with a lower monthly cost could get better access for a limited time by hitting a "turbo button" and paying a one-time fee, he said.
Alcatel-Lucent's CEO Ben Verwaayen thinks operators should rethink the notion of just charging for capacity and data. Most people don't understand what a gigabyte of data allowance means, according to Verwaayen. Instead, operators should look at charging extra for services, he said.
For example, a user may be willing to pay an extra US$0.50 per month for an alert on something that is important to them wherever they are. "That is perceived value and has nothing to do with bandwidth. But then you have to market it in a way that people understand the added value," said Verwaayen.
When operators start implementing tiered services, they have to be careful to not over-promise what users will get, because doing that is part of the nature of mobile operators, according to Collins.
How far operators actually dare to stray from existing pricing models, or are allowed to do so by possible network neutrality rules, remains to be seen.