LTE usage restrictions play role in consumer decisions

Operators that have rolled out LTE worldwide have incorporated rather diverse pricing plans, with monthly service fees ranging from less than $40 in markets such as Estonia to nearly $120 in more developed ones like Austria. With the exception of operators such as Tele2 and Telenor in Sweden, the vast majority of operators have incorporated monthly usage restrictions, noted Phil Marshall, head of Tolaga Research.

He said the specific usage limits imposed by mobile operators vary dramatically, ranging from 20-30 GB/month in many European markets, to 10 GB/month or less in the U.S. and 3-5 GB/month in other markets like Japan.

"We believe usage limits are being determined primarily by competition amongst mobile operators in specific markets, and do not reflect any global consensus regarding the fundamental economics for mobile broadband services," Marshall wrote.

Marshall said that as LTE and mobile broadband services mature, pricing strategies must change to become in tune with the overall consumer experience. "Given that most mobile users consume less than 1 GB/month, the usage limits being imposed by mobile operators have very little impact on the overall experience for a typical user. However, we believe that monthly usage restrictions play a considerable role when consumers are choosing between competitive market offers."

Marshall said according to surveys, usage restrictions play a bigger role in the overall purchase decision than connection speed in some cases. "This effectively implies that consumers would prefer that their bandwidth usage be proactively managed by their service provider, rather than being a part of the monthly contract," he said.

As such, Marshall predicts that competition will push operators to stop restricting usage and use alternative approaches to taming the bandwidth hogs such as managing capacity, data offloading and advanced pricing and segmenting.

For more:
- see this 4G Trends article

Related articles:
Verizon's LTE launch: What happened to innovative data pricing?
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Vodafone Germany reveals LTE pricing plans

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