Unlimited plans are still ruling the mobile broadband waves

Oracle has a big appetite for mobile

In this job I am lucky to get to travel to some truly fantastic cities: This year alone I have been able to visit three of the most amazing places on the planet – London, Shanghai and Hong Kong – and I won’t even begin to brag about the three day trip I scored to Shenzhen.

But there is one trip on my annual calendar that stands out above all the others: The week in September when the broadband industry descends on the City of Love for the Broadband World Forum. Paris sure does take some beating.

In fact, it was only last week that I booked my plane tickets to Paris for this September’s event and, having secured my passage for a reasonable fare, grabbed last year’s notebook to check out the highlights from the 2010 event.

Although there were a huge number of industry topics scrawled in my notebook – leaving no doubt that the age of word processing has diminished all of our handwriting – there was one subject that cropped up way more than any other: the evil of unlimited data plans.

Several keynote speakers from heavyweight European operators had opined that the unlimited data plans being offered by both fixed-line and mobile broadband operators would have to come to a stop and that subscribers would ultimately have to be moved onto metered usage plans for the industry to prosper in the long term.

Well, here we are with BWF 2011 fast looming into view, and it would be fair to say that not an awful lot has changed in terms of industry pricing – certainly not from an Asia Pacific perspective – except for a couple of operators that have gone where others have feared to tread.

NTT DoCoMo strikes LTE blow
Of all the newly launched LTE-based mobile services, perhaps none had been so eagerly anticipated as that of Japanese giant NTT DoCoMo, which launched commercially on Dec. 27.

With unlimited data plans having wreaked havoc in the Japanese mobile broadband market – creating a niche market for spectrum-rich WiMAX operator UQ Communications – market analysts eagerly waited to see how DoCoMo would price its precious LTE spectrum.

DoCoMo’s LTE plans swept the all-you-can-eat model clean off the table: The operator’s initial LTE mobile broadband plan offered just 5GB of data for a whopping US$80 a month, about 10% more expensive than HSPA services, with additional data costing US$16 per gigabyte.

DoCoMo’s LTE pricing left nobody in doubt that it wanted things to be different in the LTE era, but the same cannot quite be said for the other Asia Pacific operators that have deployed commercial LTE services.

The management of Hong Kong operator CSL has talked openly about its desire to see the local market move away from unlimited data plans and toward a more usage-based model, but – for the time being, at least – the firm has yet to withdraw its unlimited offerings.

Similarly, Singaporean operator M1 has yet to unveil any radically different LTE plans, though the operator has deployed services only to corporate subscribers, and Philippines operator Smart Communications also has yet to make any radical pricing changes since it launched LTE.

To be fair, we are still in the early stages of LTE deployment, and operators might want to bed down the technology before risking any new pricing strategies, but it could also be argued that there might never be a better time to launch usage-based pricing than when the network is underused and operating at premium performance.

Priority access kicks into gear
Indeed, the only real change that Asia Pacific’s market has seen has been the introduction of “priority access” service offers by operators, which provide top-end mobile broadband plans with guaranteed downlink and uplink speeds.

SingTel has the best example of such a plan, offering subscribers to its top-end 7.2Mbps and 21Mbps HSPA services access to its Priority Pass, which offers faster and more reliable mobile broadband connectivity than is available to subs taking SingTel’s cheaper mobile broadband packages.

Intriguingly, the plans developed by some carriers in the region to deploy services similar to SingTel’s have attracted the attention of regulators, most notably in Taiwan, where the National Communications Commission has closely scrutinized Chunghwa Telecom’s plans to introduce its own tiered service offering. The NCC allowed the CHT plan to proceed but warned the operator that it must urgently address subscriber complaints about slow downlink speeds and unstable connections on its standard mobile broadband services.

Tinkering at the margins
There is little doubt that the concept of priority access is really only tinkering at the margins of the problem, however, and that the only real solution to the problem will be for operators to bite the bullet and end the whole unlimited-plan era, as tough as that might be in the short term.

In South Korea, where the mobile data deluge has been just as bad as in Japan, senior management of second-ranked mobile operator KT has been pleading with rival operator SK Telecom and LGU Plus to end their unlimited mobile data plans, to bring some sanity back to the market.

Pyo Hyun-Myung, president of KT’s mobile business unit, told local press that the current pricing structure in the mobile broadband market “doesn’t provide any motive for us to make investments,” arguing that the operators needed to find common ground on ending the all-you-can-eat data era.

The problem is, of course, that in the highly competitive mobile market, operators are loath to act unilaterally to end the unlimited-pricing era because they are fearful that their rivals will not join them in doing so and will even use the fact that they are still offering unlimited plans – albeit on hopelessly overloaded networks – to attract subscribers.

This fear is well founded, particularly in the more price-sensitive markets in the region, but sooner or later operators are going to have to make sure that they don’t sleepwalk into making the same mistakes with LTE that they made in the 3G era. The consequences of doing so would be dire in the extreme.

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