Alca-Lu: Tiered mobile data pricing doesn't translate into operator profitability

Alcatel-Lucent (NYSE:ALU) warned during the Broadband World Forum in Paris that tiered pricing for mobile data services alone won't make mobile data services profitable.

Operators have begun introducing tiered pricing as a way to reduce network traffic and increase revenue, but Marcus Weldon, CTO of Alca-Lu, explained that the declining revenue per mobile subscriber and the increasing cost per subscriber of operating mobile networks are "converging to the point of a lack of profitability." Despite the fact that network equipment cost per subscriber is decreasing, the amount it is falling is not enough to offset the rising cost per subscriber of operating the network. Weldon also said that tiered data pricing could add to this problem.

AT&T (NYSE:T) fired the first salvo in the U.S. in June when it launched a $15 pricing plan for 200 megabytes per month and a $25 per month plan for 2 gigabytes per month. Verizon Wireless (NYSE:VZ) is expected to introduce a lower tier pricing plan today. Charging $15 per month for 150 megabytes but keeping its unlimited $30 per-month offering.

Weldon said that AT&T's low-cost plan is cheaper than the average mobile data tariff, while its 2-Gigabyte plan is more expensive than the average.

"Data revenue could fall if a high number of users go for the cheaper plan," he said. "There's going to be an acceptance period as consumers adjust to the new structure."

However, AT&T said the lower tier pricing plan has enabled it to sign up entry-level smartphone users. 

For more:
- see this Total Telecom article 

Related articles:
IBM: Tiered mobile broadband pricing here to stay
Tiered data pricing and a missed opportunity
AT&T chief: Industry moving toward usage-based pricing
Is usage-based pricing inevitable?

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