Flat-rate data plans have turned wireless broadband into a commodity before operators have been able to extract a decent return on their huge infrastructure investment. In developed markets, some operators' data usage has increased more than 20-fold over the last 12 months due to the use of dongles and the smartphone boom.
Given the cost of spectrum, backhaul and infrastructure, operators find themselves increasingly trying to manage usage with the hope of making network efficiency gains.
Innovative billing schemes, femtocells, Wi-Fi offloading and moving up the content value chain (see "The winning content strategy") are examples of how operators are fighting back in this new data-driven consumption era.
In the longer term, price will become less of a factor, especially as wireless broadband adoption reaches into the lower income tiers of the market. In the not-so-distant future, the biggest differentiator between operators will be customer service, after-sales and technical support.
The end of unlimited
Unlimited rate plans, which are pervasive throughout Asia, have already started or will fairly soon start to cause congestion problems for operators that have not invested in capacity.
Operators are having to introduce a more "democratic rate plan structure," according to Han Willem Kotterman, CSL's chief strategy officer.
"Customers that use a lot of data will have to pay more than those that don't," Kotterman says.
The general rule for operators is that 20% of users generate 80% of network usage.
"All around the world operators that have offered unlimited rate plans are starting to pull back from that decision as networks are strained under the heavy pressures that iPhones and other smartphones are putting on it," adds Kotterman.
AT&T just announced that it will replace unlimited data plans, including those for iPhone users, with two plans that limit consumption. Unprecedented iPhone data use has meant continual congestion problems for AT&T, giving rise to more consumer complaints over quality.
Starting in early June AT&T replaced its $29.99 unlimited plan with two new plans - the $15 per month DataPlus plan with 200 MB of data and the $25 per month DataPro plan with 2 GB of data. In addition and more controversially, it will separately charge DataPro customers for tethering - another data-hungry trend that is also becoming pervasive throughout Asia.
Lowell McAdam, chief executive of Verizon Wireless, has also reportedly said that unlimited bandwidth packages won't be available for LTE, which is due to launch later this year.
Elsewhere, operators are also rolling out app-based plans, time-based plans, speed-based plans and throttling as well as more common-place tiered data usage plans, in place of flat-rate unlimited plans.
"All those type of plans are being pushed out more and more to users to further control traffic over operators' networks," says Nathan Burley, telecom analyst at Ovum.
For its part, Telstra-backed CSL introduced speed-based data plans when it debuted its all-IP 2100-MHz network in March 2009. Its rivals have followed suit. The firm says most Next G subscribers take either its 3.6- or 7.2-Mbps plans, with business customers skewed toward the 21-Mbps service.
"Unlimited plans went through a brief heyday until the problems with the iPhone and people gobbling up huge volumes of data downloading video to their mobiles and clogging up the networks led to the imposition of more restrictive capped plans," says Nick Ingelbrecht, research director consumer services at Gartner.
But he says that "unlimited plans, with conditions, are back again with the iPad and will remain a feature for high-usage customers."
In addition to price, there are other ways to stop traffic growing on the network. Wi-Fi offloading and rolling out femtocells are two cases in point - both are typically being deployed in more advanced countries that have widespread fixed broadband and Wi-Fi infrastructure.
"Femtocells and Wi-Fi offloading are being used more by operators that are seeking to move traffic off mobile networks and onto other networks," says Ovum's Burley.
He says Wi-Fi offloading is very active across Europe and North America. "In Asia the practise is prevalent in Japan and South Korea. In Hong Kong, PCCW is very active in offloading from 3G to its Wi-Fi network."
Operators can also re-use existing spectrum bands - eg 900-MHz for 3G - to help cope with increasing network and customer demand.
"With our Next G network, we opened up the 900-MHz band for 3G usage," Kotterman says. "What this means is that a user can now get high-speed data coverage where you could previously only receive a GPRS or EDGE signal since the propagation characteristics of the 900-MHz band are significantly better than those of the 2100-MHz band."
Meanwhile, software solutions - such as those that compress data for smartphones - are now also widely deployed by operators to optimise network traffic.
"There is a danger with these [data compression] solutions - a user may not be able to get the equivalent internet experience that they could get on a different network or different device," warns Burley.
In the longer term as wireless broadband reaches the mass market, analysts say operators will need to distinguish themselves in terms of customer service, after-sales and technical support.
"If customers can get a reasonably competitively priced service, they will tend to wind up with the service providers that look after them, and those will be the operators with essentially the same skills set that the fixed ISPs have developed over time - good customer care and technical support," says Gartner's Ingelbrecht.
Measuring customer care and providing technical assistance to customers is "definitely playing a bigger role for operators," Burley adds.
"More operators are making a lot of investment in different support systems to make cost savings and to deliver the best possible end-user experience, reduce churn and monetise customers," he says.
Customer service and technical assistance are key differentiating factors for operators, according to Kotterman.
"Operators have local presence, are available seven days a week and have a genuine interest in serving the customers not just for the one purchase they made but for the entirety of the customer relationship."