Operator backlash against fair usage policies begins

It’s an often heard observation in the industry that mobile data has become a victim of its own success. The unlimited data offerings used to drive 3G adoption have resulted in an unsustainable business model, with the result that operators are now scrambling to revise their usage terms and introduce new billing schemes. Vodafone UK issued one such warning to its consumers this week.

From June 1, Vodafone will scrap the fair usage policy on its 500MB Flexi or Value Pack offerings, introducing out of bundle charging for pay monthly customers that go over the 500MB limit.

Under the new charging structure, monthly bundle customers will pay £5 for every 500MB after the first 500MB, while customers without a monthly bundle will pay £0.50 for every 10MB after the first 25MB.

Vodafone said it is introducing a real-time notification service to alert its customers to their usage patterns and be completely transparent about these charges. “The reason we’re introducing these charges is to make it fairer for everyone, and to protect our network from data abuse,” the company said.

Vodafone’s move is indicative of a growing trend, one the western world can expect to see more of. As Informa analyst Tony Brown noted on Monday: “The fact is that an increasing number of wireless broadband operators – across both 3G and WiMAX – are moving towards stricter download limits for subscribers and that there are increasingly few operators in the wireless broadband market that are offering unlimited packages to subscribers.”

Brown was talking about the Asia Pacific region, where this approach seems better developed. recently met with Tarek Robbiati, chief executive of leading Hong Kong operator CSL, which recently made the shift to speed based pricing for mobile broadband.

We have also looked at the mobile data explosion and its after effects, as well as the different strategies operators might employ to create new revenue streams.

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  1. Avatar Eddy 12/05/2010 @ 7:43 am

    It amazes me that despite the success of mobile technologies, operators still refuse to dimension contention ratios in their planning for data services. During the days of dial-up ISPs, the ‘uncapped’ model was feasible because the speeds were so atrocious and dependent on the fixed line operator anyway. Since 1998, things have changed and mobile operators have been caught in the same trap that killed off fixed data services for the older telcos.

    We are back exactly where we started. So much for the conferences and presentations by these ‘experts’.

  2. Avatar virtual_j 12/05/2010 @ 1:58 pm

    Guess it’s good that operators restrict their flat rates publicly. There hardly ever were an open flatrate anyway; heavy users get slowed down if they consume to much capacity or if the network reaches its limit. In addition, it’s much cheaper/adds new money for operators to send a heads-up message and charge differently instead of adding a lot more capacity and raise the general price for flat rates. Finaly it’s cheaper for the majority of the users if they just pay what they really used. In this respect Vodafone’s offering is far from differentiated enough.

  3. Avatar bb 23/05/2010 @ 11:40 am

    Professionally speaking, this is all a lot of nonsense, data capacity costs a tiny amount (even in the very small capacity we buy it at work, it is under 50p per gigabyte). The big mobile operators are not paying more than 10p per gigabyte of data capacity (unless they are more incompetent than we think). Thus, a £5/month add on easily allows for a 25GByte per month usage limit with a tidy profit margin for them.

    • Avatar Jack 03/06/2010 @ 3:51 pm

      The remark about the cost per gigabyte is professionally also alot of nonsense. You’re only looking at the cost considering expanding radio-capacity. You do have to have a core-network which also has to cope with rising demand.

      The figures you give are true when you add an extra carrier on an existing celltower. And, the figures are also incremental/marginal.

      Not a smart en sensible remark imho.

  4. Avatar Vineet 04/06/2010 @ 1:28 pm

    Well, if this is how it going to be in near future I think I will be switching back to a normal phone with no interent access because the whole point of buying an Iphone n the Plan is to use the internet but if its going to be so restricted i am better off surfing on my laptop. Infact I believe this will change people’s attitude towards buying 3G phones if they cant use it to the extent they would like to. From past few years the mobile industry has changed specially with operators, it used to be 12 month contracts with no data and now its 18-24 months and look at the cost of plans these days.

    Nothing can beat a laptop, take it or not.


  5. Avatar James 08/06/2010 @ 5:48 pm

    Broadband wireless on wide area networks was always a dubious business and technical proposition – this will tip things back towards WLAN services

  6. Avatar Oleg 13/06/2010 @ 8:02 pm

    Well, in Lithuania I pay about 10 pounds for 5 GB of 3G data via Vodafone Mobile Connect service. Real speed is about 150 kB/s, while modem shows 7.2 Mb/s.

    Moreover, if I eat more than 5 gigs, they reduce my speed to 25 kB/s and do not charge anything extra.

    This allows me to use only 3G internet for all personal needs. Its a bit weird that Vodafone offers worse service at higher costs in another countries.

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