Email this Twitter this Delicious this More choices

Mobile Networks Featured Article

Consumers Will Buy a Variety of Mobile Broadband Plans, Study Finds

By Gary Kim, Contributing Editor

Bandwidth consumption on 3G mobile networks is growing by approximately 400 percent annually while the associated revenue from data services is only growing approximately 40 percent per year, according to Heavy Reading. That's a problem.

But a new Camiant (News - Alert) study if consumers in the United Kingdom, France, Germany, Italy, Spain and Sweden suggests there are ways to better align capacity and retail pricing in ways consumers will accept.

As you would expect, consumers mostly reported they had no idea of how much data they actually were consuming, which is a major drawback of usage caps with expensive overage charges.

When asked about several payment plans, the "cap plus overage charge" was the least desirable option. The prevailing standard in Europe is a cap of 3 Gigabytes a month, costing EUR 20, with a EUR 20 charge for each GB of overage.

The survey suggests that consumers would vastly prefer a plan that includes the same usage cap, but with a lower overage charge, plus throttling of peak rates at peak usage hours. In the survey, about 16 percent of consumers said they preferred the existing plan.

About 35 percent--more than twice as many--indicated they would prefer a plan that included 3 GB of usage for EUR 20, with a EUR 7 charge for each GB of overage, with the rate limiting at peak hours.

The survey also showed that 23 percent would prefer EUR 20 a month for unlimited low-speed service, while 26 percent indicated a preference for a EUR 50 unlimited high-speed service.

The overall findings suggest consumers would prefer a choice of options, ranging from unlimited service at higher or lower speeds, plus lower overage charges in return for rate limited service during peak demand periods.

There also appears to be interest in paying additional fees for specific unlimited use of some applications, so long as users can pick the application that is most important to them.

About 43 percent of all respondents would pay EUR 5 in addition to the base plan for unlimited usage of one specific application. Of those that were interested, 90 percent said it was important that they select the application.

About 45 percent of respondents interested in a service that might provide lower speed at peak hours also said they would be willing to pay between EUR 1 and EUR 3 for on-demand higher speed "for a short duration (an hour, for example)."

Complicating matters is the lack of awareness consumers have about their actual usage, though.

Some 62 percent of respondents did not know what their usage cap was. Fully 76 percent did not know how much bandwidth they actually used.

Some 39 percent reported they did not know what happens  if they go over the usage cap. About  45 percent were very concerned or moderately concerned about exceeding the cap.

It might be going too far to argue that "one size fits none." But the survey does suggest there are a relatively small number of alternative plans users might be highly receptive to buying. More than a quarter of users would pay 2.5 times more than present tariffs for unlimited high-speed service.

About a quarter also would pay for slower, but unlimited speeds. More than a third would trade peak-hour throttling for a significant reduction in overage charges.

"Our study clearly indicates that there are definite opportunities for mobile operators to use rate plan structures to help solve this problem and that users are receptive to creative alternatives," says Randy Fuller (News - Alert), Camiant VP.

By rethinking mobile data rate plans, operators can enable users to make value decisions based more in line with operator cost as well as directly address peak bandwidth utilization and the true cost of marginal network growth, Camient argues.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Patrick Barnard