Thursday, 10 June 2010

AT&T and Verizon abandon unlimited mobile data - the only sensible move

Over the last couple of weeks both Lowell McAdam of Verizon Wireless and the irrepressible Ralph de la Vega of AT&T Wireless announced plans to rein in unlimited mobile data plans. In the case of Verizon this is to coincide with the launch of LTE. For AT&T (struggling with network capacity issues now) it'll happen now. Both are planning to replace unlimited plans with a tiered approach to tariffing that will be reasonably familiar in European markets whereby users pay different amounts depending on how many GB of data they need.

Obviously there are some drawbacks to this approach. Users love unlimited plans as it takes away any fear, particularly of the dreaded overage fees. However, the availability of unlimited plans puts undue strain on the network as a result of small numbers of heavy users generating massive volumes of traffic. Last year I was in Finland and all the operators there were complaining about exactly this issue. They let the unlimited genie out of the bottle and were struggling with how to put it back in. But put it back they must.

Managing traffic growth by restricting unlimited plans is essential if MNOs are going to manage the rapidly declining revenue per GB that threatens to derail plans for deploying new network capacity. Let's face it, no-one's rolling out LTE do provide better voice coverage. It's all about data and if the MNOs can't maintain a reasonable rev/GB then regardless of LTE's benefits in terms of spectral efficiency, they won't be able to afford to deploy. Restoring a link between revenue and usage is essential.

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