Feature Article

October 30, 2013

The End of Mobile Minutes

Wireless mobile providers used to compete by proudly displaying the monthly minutes they offered to get customers to sign for a service. This generally involved a contract lasting a minimum of 12 months, and depending on the type of phone that was purchased it could be much longer. As smartphones continue to replace all other mobile phones, voice-driven billing for cellular service has seen its last days.

The obituary for this business model has been written for T-Mobile, Sprint, and Verizon in the past year as they all abandoned this model for their smartphones. The latest company to join the other three is AT&T, and an article on Forbes titled, "RIP Mobile Minutes," it clearly states the direction in which the industry is heading.

The decline of voice revenue has been falling for more than five years, while data revenues have been going up, which is almost the same phenomenon that took place during the switch from landlines to Voice over IP (VoIP). The introduction of VoIP gave consumers and business an affordable communications solution with many options. This eventually resulted in the phone service providers adopting flat rates with unlimited minutes for nationwide long distance, because VoIP providers were making it impossible to compete.

The same technology that lowered the rates on landlines is also making it possible for smartphones owners to start talking as much as they want. When LTE gets fully implemented all traffic becomes data traffic, and operators will have to start considering a new model for pricing usage that will keep them in business and their customers happy.

During the early days of VoIP it was Vonage and others providing service to residential and business customers, today it is FreedomPop and netTALK offering the same jaw dropping low rates for smartphones. FreedomPop for example starts customers with the first 200 minutes, 500 texts and 500 MBs of data each month for free – if you go over you pay for it. The premium service is an unheard of $11 for unlimited talk and text plan. While the netTALK doesn't start you with free minutes, the rates are so low compared to regular service providers it might as well be free.

FreedomPop is a disruptive force in the true sense of the word, and just as in the past the telecom companies are taking their sweet time to adopt a technology that everyone but they seem to see.




Edited by Alisen Downey


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