Thursday, August 5, 2010

Yankee Group: "Tiered Data Plans Are Not the Answer"

A new research paper by Christopher Nicoll from the Yankee Group finds that "Tiered Data Plans Follow the Wrong Business Model".

See the brief - "Tiered Data Plans Are Not the Answer" - here:
" .. data users consume enormous amounts of bandwidth at random times, and tend to do so somewhat in unison when a major event occurs. Such uncertainty creates planning and operations problems, as well as a huge expense for operators. Tiered data plans don’t only fail to address that expense; they also don’t address the most glaring issue: Operators need to generate revenue from the application value chain."
While I do not have access to the rest of the report, I suspect it associates tiered services with quota/byte cap plans, offering a number of consumption levels, as we have seen lately from AT&T (here), Verizon (here), Orange UK (here) and Cricket (here).

However, tiering could refer to many other aspects of the mobile broadband or data service, including offering QoS priorities for certain services (video, VoIP, gaming). This allows carriers to monetize on content, whether their own or offered by OTT providers. Recent examples are Telkomsel (here), Elisa (here) or the recent statement from Skype (here).

Going forward, and subject to what Net Neutrality will allow carriers to do, TeliaSonra's approach (see "TeliaSonera's New Business Model: Value-based Pricing" - here) could be the ultimate solution.

Note that all examples for the more advanced service plans come from non-US operators.

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