Mobile Internet Tariffs

Thomas Husson | February 27, 2008, 01:41 PM

Not a single conference or mobile event I attended in the last 3 years without media companies or Internet players complaining about mobile data plans. No doubt that non affordable and non transparent data pricing schemes have been a key barrier (but not the only one) to the uptake of mobile services.

From web'n'walk (June 2005) to X-Series (November 2006) and SFR Illimythics (November 2007), innovative unlimited mobile Internet tariffs are gaining ground. According to a new survey we just published: "Consumer Mobile Internet; Marketing Unlimited Data to Unleash Use", early adopters subscribing to those tariff schemes are heavy users of not only mobile but also online services. Operators thus prefer to impose fair-use policies and restrict potentially cannibalizing applications to protect profitability. Nonetheless, they should adapt their marketing to ensure these engaged customers become ambassadors who will influence mainstream adoption. Looking at the differences between operators and the small caps (devil always hide into the details...) with the numerous restrictions, there are opportunities here to appear more friendly to early adopters.

Now that those "all you can eat" / unlimited plans are available, many claim mobile Internet will change dramatically. O2 UK recently reported that 60 percent of iPhone owners use more than 25 MB per month. An Orange France's marketing spokesperson recently told the press that average use of iPhone owners was around 110 MB per month. Very impressive figures indeed but not the panacea. One should bear in mind:

- few end-users have adopted those unlimited consumer Internet tariffs yet: 250K iPhone data plans for o2 Uk and 250K Illimythics for SFR in France as of early January, 92K for iPhone subs with Orange France end January.

- average usage even though high among early adopters is still well below the limits (500 MB for the iPhone plans). What will happen when adoption will be more mainstream?

- the walled-garden approach is not entirely over. Whatever they claim, operators are still promoting their own offerings. Even though they will probably be bypassed by direct to consumer approaches from Internet players and content providers, they will continue to try to leverage their role in the value chain (default audience for their own portals).

- not all operators have embraced this trend in Europe. In Belgium for example, Orange World is still priced at 6 euros / month for a "quasi-unlimited access" with 7.5 MB (?!!). But if you go over this "quasi-unlimited access", you have to pay 0.5 euros / session. And if you go over 1MB in this session, you will be charged 0.5 euros per incremental MB. For Proximus (market leader), off-portal browsing is charged 0.4158 euros for 5 minutes!

I remember asking once the head of strategic marketing of a major European operator what were the most innovative services he expected in the coming years. I expected an answer around location-based services, social networking, m-transport, m-health, whatever...

The answer was pretty direct and simple: "tariffs, tariffs and tariffs".