Article 13; Getting What You Pay for on the Mobile Internet

This week’s article response is to an article written by Kevin J. O’Brien of the New York Times. The article delves into the current craze for mobile data sharing via the mobile networks that are becoming more and more popular these days. The subject is mainly of deciding whether or not to continue down the road of “all you can eat” type mobile plans for consumers. This type of plan is what the industry calls plans that include unlimited services on smart phones.

The spotlight on the subject falls on a Nordic Telecommunications operator. “When TeliaSonera, the Nordic telecommunications operator, switched on the world’s fastest wireless network last December, customers quickly ratcheted up their consumption of mobile data tenfold”. This network is called L.T.E, or “Long Term Evolution”. It is with this relatively new technology that researchers feel the all you can eat mentality will not hold.

The problem is that “network operators fear that flat-rate plans will eat into profits or even fail to cover costs”. Obviously, before too much of that would be allowed to happen, the market would shift to higher pricing to balance with the huge upswing in demand. “Finding a way to make mobile profitable in the medium and long term is one of the industry’s big priorities,” said Mike Roberts, an analyst at Informa Telecoms & Media in Chapel Hill, North Carolina.

To better explain the effect of L.T.E in Sweden, I quote Anna Auguston of TeliaSonera: “In 2009, the mobile data on our network in Sweden increased by 200 percent but the number of subscribers increased just 60 percent”. According to Anna, “Clearly, it was not a sustainable model from a business perspective to have a single, flat rate”. As it stands, “top executives at AT&T, Verizon Wireless, Vodafone, Deutsche Telekom and Telefónica have all recently called on the industry to move away from flat-rate data plans, although only Vodafone so far has attempted a tiered pricing plan.”

Main Article:

http://www.nytimes.com/2010/04/19/technology/internet/19iht-tiered.html?pagewanted=1&ref=technology

Second Article:

http://mobileopportunity.blogspot.com/2006/12/will-flat-rate-pricing-make-mobile-data.html