Metered Mobile Data Is Coming and Here’s How v

Table of Contents

  1. Summary


At the close of 2009 — a year that saw AT&T add 2,000 towers to its mobile network to help it handle demand for 3G data on the popular iPhone and Verizon embrace the concept of fiber backhaul for its own and others’ mobile networks — operators are realizing that there might be too much of a good thing in the consumer demand for data.

But what to do about that is another question. In the face of a Federal Communications Commission effort to require carriers to avoid discriminating on traffic flowing on their wired and wireless networks, and a 66-fold increase in mobile data demand that’s expected in the coming four years, operators have now begun to ponder limits on consumer data consumption. There is a complex relationship between those limits, the available resources mobile and wired networks have today and the profitability of carriers, but the bottom line is that most operators are seeking ways to escape flat-rate plans such as the one AT&T charges for the iPhone and move to a system that is a bit more dynamic — or at least better able to match the constraints of the mobile network.

In Europe, carriers are beginning to test and implement new pricing plans that are designed to satisfy customers, boost carrier revenue and help carriers manage the influx of traffic on their mobile networks. Providers such as Vollubill, Bridgewater Systems, HP, IBM and Camiant are designing the back-end infrastructure and showing carriers how to make some type of variable pricing a reality. Here are several types of plans on the horizon (and we’ve embedded a summary comparison chart of the approaches at the end of this article).


This is the most basic solution, and the least appetizing to most customers. At their most basic, caps limit the amount of data a subscriber can download under their subscription plan, then charge high overage fees to keep people from using more. Many carriers have caps on broadband plans sold for computers and other devices, but many don’t have similar caps on smartphones. This is becoming a problem for global carriers who have the iPhone, as consumers tend to use five to seven times as much data on iPhones, thanks to the better web surfing experience offered by the Apple devices as compared to normal smartphones, according to a Bernstein research report out in December.


Tiered access offers customers a choice between different levels of service. One large European carrier, using software from Volubill, signs up customers for a Platinum, Gold or Silver package. The Platinum package offers consumers 5GB of data downloaded on a prioritized basis, but all data downloaded after that is delivered on a best-effort basis. In addition, certain types of traffic such as downloads and P2P traffic would always be best-effort. The gigabytes allowed per month drop with each package, and consumers are offered an opportunity to re-up their package when they go over the limit.

Akil Chomoco, a product manager at Volubill, says that in modeling of the new packages, about 20 percent of the customers ended up paying less or moving to other carriers, however, the carrier saw 9 percent overall revenue growth through the implementation and was better able to manage network traffic. In the U.S. implementation of this type of plan may be impacted by net neutrality proceedings. Whether rules that are passed will prevent this, or constitute “reasonable network management,” remains to be seen.

Congestion Pricing

bandwidth Carriers have been talking about congestion pricing for a few years and surveys even show that consumers are ready for it, but so far I’m unaware of a wireless provider using congestion pricing. The gist of such pricing would be to charge more per megabyte during peak hours when the network is congested. Variations on that theme involve charging folks more to send video traffic or stream music during that time.

Consumer-Designed Plans

Bridgewater Services, a Canadian company, in June launched a service for carriers that enables them to offer their end customers customized plans. The thinking behind the product is to let consumers see how much data they are consuming and then help them allocate their bandwidth for the things that matter most to them.

As metered usage becomes increasingly inevitable, some users will prefer a fixed, rather than a variable bill. Allowing a user to say, “Let my streaming media through, but I’m cool with crappy VoIP,” could engender goodwill among consumers and help them learn more about their data consumption.

Bridgewater also has an iPhone app and a BlackBerry app that consumers can download to monitor their mobile bandwidth and set limits on their own.

Offload from Cell Networks

Finally, given that cell networks are shared infrastructure that will likely always face some congestion issues, carriers can entice folks off the network by providing free Wi-Fi. AT&T already does this for iPhone customers, and Verizon announced free Wi-Fi access this week for its mobile broadband (not smartphone) customers. Taking that a step further, rewarding people for hopping off of the cell network, or even dumping them when they get withing range of a Wi-Fi signal are possible steps. In the future, most cell operators are looking at ways to manage customers’ experience on their network through Wi-Fi, femtocells and other options for getting packets to the customer in the cheapest, most efficient way possible.

Technology plays a huge role in enabling many of these pricing plans, but to change consumer behavior, pricing plans will likely be the impetus that forces the consumer to behave as the carrier wishes. The key will be how subtly that force is applied. Current caps are a blunt instrument. Can carriers offer, and will consumers accept, more gentle coercion?

When folks look back on 2010, they may view it as the year of the meter for many broadband-based services, but it’s equally possible that a few tweaks on pricing plans by communications service providers mean that consumers could view 2010 as the year their wired and mobile broadband became personalized, or even got cheaper.

Caps Tiers Congestion pricing Consumer-designed plans Offloaded traffic
Description Data limits w/high overage fees Limited amount of “prioritized” data every month; remainder delivered on a best-effort basis Consumers pay a premium for data delivered during peak hours Consumers monitor and limit their own bandwidth usage Consumers are financially encouraged to use Wi-Fi, femtocells and other technologies for data
Pricing Fixed Fixed Variable Either Either
Examples Data-card plans from AT&T, Verizon and others Usage-management solutions from Volubill and other developers None deployed to our knowledge in mobile Bridgewater Systems’ myPolicy Wi-Fi, femtocells
Pros Easily understood by the consumer Fairly simple concept and reasonably effective at controlling traffic Effective at controlling traffic Provides visibility and control for the consumer Eases traffic as it optimizes technologies for the most efficient and cheapest data transmissions.
Cons Overages are expensive, consumers must monitor themselves Consumers may be unaware when they reach limits for prioritized data and could be confused when their data service slows Complicated and confusing for consumers; may run afoul of eventual net-neutrality legislation Can be confusing for consumers accustomed to paying flat rates Difficult for carriers to monetize
Consumer Appeal Rating D C C B A — if it saves them money

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