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Net Neutrality Rules May Signal a Change in Wireless Pricing

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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 (s vz) 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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9 Responses to “Net Neutrality Rules May Signal a Change in Wireless Pricing”

  1. 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

  2. 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.