Blog Post

Behold! The a la carte pay TV model is coming to your mobile data plan

Mobile operator 3 Hong Kong will offer its subscribers a WhatsApp Roaming Pass for $8 ($1 USD) a month that gives them unlimited access to WhatsApp services without counting it against their data caps, or a $48 ($6.19 USD) daily pass offering unlimited WhatsApp use and 5MB of service in 78 destinations around the world.

WhatsApp, the popular texting app that has taken a huge chunk out of operators’ lucrative texting plans around the world, has been working to get closer to carriers. But this deal is worth paying attention to because if it succeeds in giving customers what they want while also helping carriers mitigate the margin-shaving effect of over the top services, it may be the future of mobile data plans.

Instead of buying a bucket of bytes, what if users ended up buying a bucket of bytes and access to a few favorite apps? Then the mobile pricing looks more like an a la carte cable offering and less like forcing people to pay an arbitrary fee for a device ($40 for a smartphone!) in addition to the bucket of bytes as new plans from AT&T (s t) and Verizon (s vz)(s vod) do.

The pros and cons of the WhatsApp offering

While there are plenty of people who want to buy an amount of data from their mobile operators and use it exactly how they please, for many carriers such a pricing plan would be financial suicide — cutting their profits to the bone. It’s possible that in competitive markets carriers will arise who can do this: Take the lower margins and still support their business. That would be awesome, but for now those options are few and far between.

This is why carriers have killed off unlimited plans and are experimenting with family plans. It’s also why operators such as AT&T are thinking about how they work with popular app makers, with Ma Bell considering some kind of plan to charge app developers for the data their users consume. Consumers want their apps, carriers want to make money and appmakers want consumers to be able to use their apps without fear of ringing up a crazy bill.

The WhatsApp pass solves a lot of these issues in a way that offers carriers a way to monetize an over the top application that’s threatening their revenue stream, gives consumers more security as well as the international roaming, but also steers clear of network neutrality issues because consumers don’t have to sign up for this plan to use WhatsApp. While 3 Hong Kong declined to discuss whether or not WhatsApp has to do to get this deal, if the terms were fair to WhatsApp, then even app makers should like this.

For most normal customers who might use WhatsApp, but don’t want to worry about their data allocations, paying $8 a month for security and access to the app while they travel is a good way to offer value, above and beyond just bytes. And honestly, that’s what many carriers don’t seem ready to understand.

So what apps would you pay for?

Carriers have established ties to popular apps for years, with varying levels of success. One of the earliest examples was the creation of the Skype(s msft) phone for INQ which helped boost revenue for the operator as new subscribers picked up the handset and used a lot of data. Verizon also did a deal with Skype to bring the service to handsets and let them use the actual circuit switched network to make calls. Telefonica is building its own over-the-top services to compete. Several operators around the world have Facebook-related(s fb) plans.

So then for consumers the question becomes what apps would you actually subscribe to? And for carriers the question is how many apps do they want to work with? For example, consumers might love a YouTube (s goog) app, but because video consumes so much bandwidth, offering a reasonable rate to consumers that won’t blow an operator’s network might be a challenge. But, if Google and the carriers managed to work together to make the app less piggy on the bandwidth side, maybe something would work. Perhaps we’ll hear more about that next week at our Mobilize conference when Shiva Rajaraman, director of product management at YouTube, shares how to build a mobile video app.

I for one would pay for a Google Maps everywhere plan simply for the security of not going over my data limits while traveling internationally or risk emptying my data bucket as I wander lost around my hometown of Austin (yes, I am that directionally challenged). I might also pay for an hour of guaranteed low-latency Skype or Tango video calling over the cellular network provided it wasn’t more than $5 a month. At that point, my mobile plan starts looking more like an a la carte cable plan and less like a bucket of bytes. If done well such plans could be good for operators, consumers and even app makers.

2 Responses to “Behold! The a la carte pay TV model is coming to your mobile data plan”

  1. james salmon

    The press release states that the $8/month is for local (Hong Kong) usage, avoiding additional data charges, not for roaming as your article suggests. If you want to take Whatsapp abroad, the press release says this will cost $48/day and include 5Mb data.

  2. No, this is a terrible idea. One bit should not cost more than a different bit. They are either a 1 or a 0. This is will be anti-consumer just like the shared data plans. I for one use over 30 different apps, paying 5 bucks to use each of them is outrageous.

    I don’t see how you could support something like this.