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Mobile data pricing - bucking the downward trend

by Josie Sephton | 1月 28, 2011

If anyone thinks that pricing always trends downwards as competition intensifies, they obviously aren't tracking mobile broadband.

A cursory glance at the news in any given week will often reveal yet another mobile operator who has either moved away from flat rate data pricing, or who has reduced upper data limits.

The pre-cursor to these changes is that operators are struggling with capacity issues, as demand for mobile data grows. If you've ever spoken to anyone who uses mobile data, chances are they will tell you how poorly their service performs when they are on the move, particularly if they are in higher density areas, where networks are much more likely to be overburdened.

The problem is that there is not much that operators can do, at least in the short term. True, we have new generation networks like LTE coming along - but they aren't here yet, and the reality is that demand for mobile data is growing at such a pace that these new networks will find themselves faced with similar capacity issues before long.

Operators are also looking at off-load solutions. O2 in the UK recently announced the launch of a free wireless network that promises to be double the size of existing networks by 2013. Whether the extent of the coverage will be enough is debatable (the number of hotspots cited doesn't seem that high given the geographic reach needed), but initiatives such as this are a move in the right direction in dealing with the growing capacity issues they are facing, caused by the rise in smartphone ownership, and the resulting increase in data traffic on the move. However, it is not a solution that will have an immediate impact on what is already a serious problem.

Mobile operators have found themselves turning to pricing initiatives as a partial solution to the issue of burgeoning data growth. Of the 74 mobile operators and over 600 data packages that Teligen tracks as part of its mobile broadband service, T-Wireless, very few offer genuinely unlimited data subscriptions. And of late, we are seeing a marked shift to capped usage, along with a reduction in upper limits, and a significant price tag attached to further usage over and above this limit for the remainder of the month.

While this may seem unpalatable, the reality is that, at present, for many, the allocated allowances are rarely reached, and they won't be significantly impacted by the price changes - that is if you ignore the fact that a reduction in usage allowance for the same price is, effectively, a price increase. However, the longer term is unlikely to present such a rosy picture for users, who are increasingly incorporating ever wider mobile usage into their daily lives, driven by smarter devices, increased ease of use, more readily available, attractive content, and a wider range of applications. Whether mobile operators become more innovative in their mobile broadband pricing, and offer users something in return for price hikes, remains to be seen. But one thing is sure, mobile broadband pricing only seems to be heading in one direction.

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