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Research and Markets: New Report Expects Mobile Data Revenues to Increase at a CAGR of 14.5 Percent between 2010 and 2014

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Posted June 14, 2010

DUBLIN--(BUSINESS WIRE)-- Research and Markets (http://www.researchandmarkets.com/research/249e2b/mobile_data_pricin) has announced the addition of the "Mobile Data Pricing Plans: How Operators Can Escape the "All You Can Eat" Trap - Global Telecom Insider / Vol. 2, No 2, Edition 6" report to their offering.

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.

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.

The exponential increase in traffic generated from the use of data-intensive applications is one of the top challenges that mobile service providers are facing today. Though data revenues are increasing at double-digit growth rates, this growth rate is but a fraction of the rate of growth in overall data traffic. The difference will only widen with time. Ciscos Visual Networking Index estimates that total data traffic will increase at a compound annual growth rate of 108% between 2010 and 2014. By contrast, Pyramid Research expects mobile data revenues to increase at a CAGR of 14.5% between 2010 and 2014, and total revenues to grow at a mere 5.8% CAGR during the same time period. Despite the fact that data will account for the vast majority of traffic on mobile networks by 2014, it will still constitute only 37% of total revenue, illustrating the challenge operators are facing to monetize the rising appetite for bandwidth-rich applications.

Mobile operators globally are struggling to maintain the capex levels required to keep up with the exponential growth in data traffic, affecting the experience of the end user. A poor user experience translates into an increased service abandonment rate.

Operators are looking to address the challenge, in part, through pressuring network infrastructure suppliers to produce higher-bandwidth-capable equipment at a lower price. More important, however, are the changes that operators will have to make to their service plans in order to achieve their dual objectives of increasing the revenue derived from existing data users and attracting new and voice-only users to data plans. Unlimited data plans are not sustainable in the long term, as they cap spending while usage continues to increase. They are also inaccessible to large proportions of the population given current rates. In order to meet operators objectives of increasing revenue from existing users for additional applications and attracting new users, new pricing models will need to be introduced. Tiered pricing will become as prevalent for mobile data packages as it has for fixed voice, mobile voice and fixed broadband pricing.

This Global Telecom Insider 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.

Published monthly for each of the worlds most dynamic regions, Telecom Insiders are packed with trend analysis, industry best practices, market sizing and forecasting, competitor analysis, and case studies, providing you information you can leverage to make better business decisions.

Key Topics Covered:

INTRODUCTION
STRATEGIES TO PROFIT FROM MOBILE DATA
Why must all you can eat billing plans evolve?
Evolving the all you can eat model in developed markets
Developing mobile data plans for prepaid markets
MARKET DETAIL
CASE STUDY: Orange France uses a wide array of pricing strategies to target different
customer segments
CASE STUDY: NetCom ASA introduces fair usage policy for heavy data users in Norway
CASE STUDY: Oi Brazil educates customers on how much data they consume
CONCLUSIONS
Key findings
Recommendations
RELATED RESOURCES
Table of exhibits