Unlimited Data Plans Headed for Extinction, Telecom Exec Survey Says

NEW YORK Aug 23 (Reuters) – The mobile telecoms industry is leaning towards ending flat-rate data plans, which have fuelled an explosion in network traffic while bringing in little extra revenue, according to a survey published on Monday.

The poll of 391 international mobile executives found that 55 percent agreed tiered pricing was the way forward in mature markets, with 47 percent saying that "all-you-can-eat" data plans were damaging their ability to increase revenue.

Almost half — 48 percent — predicted mobile operators would focus on developing new pricing models over the next three years, in the survey carried out by international law firm Freshfields Bruckhaus Deringer.

"Mobile providers are remodelling their pricing strategies to sweat their assets whilst tentatively looking at new product offerings," Natasha Good, co-head of the law firm’s mobile group, said in the report.

"Usage-based pricing is a logical solution. It will ease current capacity issues by capping demand, contain capital expenditure requirements and potentially increase revenue."

Mobile carriers introduced flat-rate data plans to encourage consumers to try third-generation (3G) services like mobile email and Web surfing, after spending billions of dollars on building 3G networks and buying licences in the early 2000s.

But the unexpected success of the Apple (NASDAQ:AAPL) iPhone and other smartphones in stimulating demand is leading to overcrowded networks, at a time when operators are cutting back on capital expenditure rather than expanding network capacity.

In mature markets, carriers led by AT&T (NYSE:T) have begun eliminating unlimited data plans.

In developing markets, however, 78 percent of mobile operators surveyed agreed that basic voice and data plans were more commercially viable than tiered pricing based on usage.

Freshfields’ Good warned that consumers might not easily accept changes to their data tariffs.

"Questions remain over whether consumers will be easily weaned off flat-rate data tariffs and how long mobile operators can stave off the need for investment in new technologies and infrastructure to maintain quality levels," she said.

A survey carried out last month by GfK NOP in association with Reuters in Britain found that users of smartphones cared more about their mobile data allowance than they did about their choice of operator or even handset brand.  (Reporting by Georgina Prodhan; Editing by David Cowell)


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