Tiered data pricing and a missed opportunity

The hurried introduction of tiered data pricing--first triggered by AT&T--has been roundly condemned by industry pundits as a backward step. Having set consumers' expectations with notions of 'unlimited data', O2 and others have now introduced data plans more focused on what they can profitably provide rather than what users might want.

While 'unlimited' never quite meant what was advertised, consumers felt reassured with the concept. With tiered pricing operators are now asking these same users to understand what 50Mb means in terms of the number of internet pages accessed, the size of downloads or the duration of a video stream in terms of data volumes.

However, the MVNO Giffgaff, which is owned by O2 Telefonica, has decided to ignore this trend and stated that it would not be scrapping its unlimited data plans. The company, which claims it has discussed this refusal to follow the herd with its parent O2 Telefonica, maintains that it has a very different customer base to O2 so it would be wrong to drop the concept just because other operators have done an about turn.

Albeit that Giffgaff is far from being a traditional MVNO and considers itself to be more of a social networking company with a focus on increasing engagement between members, the worry must be of attracting the wrong sort of user--the data-hungry consumer less worried about social chitchat.

The company's MD, Mike Fairman, has admitted that there is a worry that this could occur, and data usage patterns would be carefully monitored.

Whether Giffgaff can survive by offering a service that other, significantly larger, operators have withdrawn, will be watched closely by other MVNOs that might consider offering a similar service to their niche customer base.

However, the blunt instrument of tiered pricing would seem to lack imagination given the sophisticated technology available to operators. Policy-control techniques and real-time charging platforms are capable of enabling much more than what is essentially an exercise in capping data consumption.

Perhaps the reoccurrence of their networks becoming overburdened with smartphone traffic--and the resulting bad publicity--has promoted this knee-jerk reaction by operators. But the opportunity to implement something creative using Deep Packet Inspection or policy control would seem to have been missed, and instead there has been a hurried retreat to what worked previously.

After many years waiting and hoping that mobile data traffic would become a meaningful element of an operator's business, its arrival would seem to have caught the community totally by surprise. - Paul