Sunday, June 06, 2010

Mobile - By 2014 data will be the "vast majority" of traffic but only 37% of revenues

[prnewswire] Despite the fact that data will account for the vast majority of traffic on mobile networks by 2014, it will still constitute only 37 percent of total revenue, illustrating the challenge operators like AT&T are facing to monetize the rising appetite for bandwidth-rich applications, according to a new report from Pyramid Research.

Mobile Data Pricing Plans: How Operators Can Escape the "All You Can Eat" Trap analyzes the evolution of pricing for mobile data plans and the impact on subscriber adoption and usage levels. It begins by reviewing the evolution of data plans to date and highlighting the limitations of existing plans, particularly the "all you can eat" model. We then provide examples of how data plans must evolve in order to address two key objectives of operators: increasing spending from existing users and attracting new users. The report includes case studies of three operators: Orange France, NetCom Norway, and Oi Brazil.

Pyramid Research expects mobile data revenues to increase at a CAGR of 14.5 percent between 2010 and 2014, and total revenues to grow at a mere 5.8 percent CAGR during the same time period, notes Ewa Romaniuk Calkowska, analyst at Pyramid and author of the report. "Data will still constitute only 37 percent of total revenue, illustrating the challenge operators like AT&T are facing," she says. "AT&T's recent announcement that unlimited data plans will no longer be available for its new customers confirms Pyramid Research's assessment that operators will move away from the unlimited pricing model since it is becoming unsustainable."

The "all you can eat" business model has created its own set of challenges. "The first, and perhaps most important, is the significant strain on operator networks that the model has generated," Romaniuk Calkowska explains. "The second challenge related to the unlimited monthly plan model is related to the 'massification' of mobile data services." According to the report, there are several tools operators can use to cap data usage and monetize increasing traffic growth.

Operators to Pull the Plug on Unlimited Mobile Data Pricing Models, Pyramid Finds

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