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Summary:

The FCC implementation of rules around network neutrality on Tuesday may open up a change in the way carriers price mobile broadband — and it’s not going to get cheaper. Uncertainly over network neutrality has held U.S. operators back when it comes to new pricing plans.

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The Federal Communications Commission implementation of rules around network neutrality on Tuesday may open up a change in the way carriers price mobile broadband — and it’s not going to get cheaper. I’ve written before about how European operators are using innovative pricing plans to charge users based on their applications and the time of day. In almost every conversation I’ve had with the companies that enable such pricing, network neutrality has come up as a question leading operators to hold back in the U.S.

For U.S. operators, the question of whether or not charging someone for a Facebook plan, or for prioritized access to online video would run afoul of FCC regulations was always an issue. So while I don’t expect Verizon to change its pricing tomorrow, the fact that there are a set of rules out (or almost out since the full text of the order still isn’t available) will make it far easier for operators to plan for pricing changes that won’t run afoul of the FCC or will intentionally run afoul of the FCC in order to test its authority).

John Aalbers, CEO of Volubill, a company that provides software and gear to help operators implement different pricing schemes, said this morning he thought the new rules would help bring clarity for North American operators. “Whenever we talk about new pricing and charging models it inevitably ends up hanging on the net neutrality talks,” Aalbers says. He thinks the compromise, which allows wireless operators some leeway on prioritizing traffic if it’s for “reasonable network management,” and as long as they aren’t blocking competitive services, could open the door for operators to create plans such as the gaming packages some of Volubill’s Middle Eastern and African mobile carriers offer. Under such plans, mobile subscribers pay for a package that will prioritize gaming packets over other types of packets.

Aalbers says other reasons U.S. operators have delayed introducing new pricing plans could be because the market for smart phones and data plans is still growing, and those new users are still boosting revenue for operators overall. He argues that eventually the consumer demand for bandwidth and the operator’s need to deliver good quality of service will force most of them to choose new pricing plans that will require the use of software from companies such as his.

This may be true, although given the availability of Wi-Fi offload and the re-emergence of femotocells in public spaces, I’m not entirely sure there’s some sort of looming capacity crunch that will wipe out operators’ margins. After all, they’re healthy right now, and operators seem to be encouraging more data use through machine-to-machine programs and new app stores. Meanwhile over in Europe a mobile broadband provider just launched a true unlimited plan, which will bear watching. Since the market is competitive 3 U.K.’s unlimited plan may expose the idea of a bandwidth shortage necessitating prioritized pricing schemes as a lie. Again, competition might enforce what net neutrality cannot.

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  1. IMHO, attempting to charge access fees for free websites/services will end in failure for the carriers in the US. The first carrier that attempts this model will gain bad blood with consumers and advertising fodder for their competitors. I just feel the wireless space is competitive enough that some carriers will always be hungry enough to allow “free” website to remain free.

    The capped data model (5GB) is the best approach for the users to be responsible for their own data usage.

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  2. [...] to those who dislike any government regulation, and feel it is unnecessary. What we now wait for is what actions the mobile providers take. I expect to see an increase in the number of data plans from mobile providers, with plans like [...]

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  3. This ruling was not a smart move, as it opens the floodgate for change. Status quo for the most part was working just fine.

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  4. Gigaom readers may enjoy this in-depth 3 part series on the implications of the recent FCC vote on net neutrality and the distinctions between wireline and wireless titled “A Moveable Beast” http://tradewithdave.com/?p=4261

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  5. I am a devoted reader of gigaom and have been for years but you don’t half write some lobotomised rubbish. Stacey if you knew anything about the UK market you would know H3G are not run as a regular business; they have never made a profit and probably never will. The focus remains on the short term in the hope someone desperate will buy then. So Ditch the stupid comments about their foolish short term tariffing moves ‘exposing lies’ and do us a favour by demonstrating credible examples from profit making telco pipes. You do your arguments no credit

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  6. In layman’s terms, how did the FCC treat mobile differently and why?

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  7. [...] behavior and are more concerned with outright blocking of content. In fact, as Stacey wrote about, it opens the way for more usage-based pricing. But the rules also allow the FCC to investigate anti-consumer behavior, which is what Free Press [...]

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  8. [...] said operators will still likely turn to tiered-data packages and network management techniques to get the most out of their networks and manage usage. But he said Skyfire can play an important [...]

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  9. [...] Capitol today for a House Communications and Internet Subcommittee hearing on the necessity of the network neutrality order passed by the FCC in December. The hearing was the first step in a process that attempts to repeal the FCC’s network [...]

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