Last year, U.S. carriers Verizon Wireless, AT&T Mobility and others like C Spire Wireless launched shared data plans for consumers. Meanwhile, Sprint Nextel has started to offer shared data plans to business users (following T-Mobile USA and Verizon), and just this week AT&T announced a competing plan for business customers.
As of the end of the fourth quarter, more than 21 million Verizon customers were on its Share Everything shared data plans (almost a quarter of its retail postpaid customer base) and 6.6 million of AT&T's customers were using its shared plans. Verizon executives have said that Share Everything plans are prompting customers to attach more devices to their plans, including mobile hotspot devices, each at an additional fee.
The hope, of course, is that shared data plans will make users happy, reducing subscriber churn, and open new revenue streams for operators. However, a price war is likely to break out over the next few years, just as happened with family voice plans years ago, and operators will need more than an attractive price to differentiate themselves from the competition.
What they need are flexible, innovative shared data plans and adaptable business models that provide for the mobile devices of the future, not just smartphones and tablets.
So what should we expect from the next evolution of shared data plans in the U.S.?
Parental control tools
Adding parental control tools to shared data plans could become a nice differentiator for U.S. carriers. The real benefit of using shared data plans is unlocked when a user has true control over how the bucket of data is allocated between family members, not just the measure of how much data is consumed per user. Letting parents control their children's mobile data usage on a very granular basis would not only be welcomed by many parents--operators could charge for it. (Verizon already charges $5 per month per device for the very limited usage controls it offers.)
Some examples of more granular parental control options could include the ability to limit teenagers to using mobile data during only certain hours of the day; impose daily quotas so that the monthly allotment is spread out over the course of the month; and link bandwidth consumed to services used. The latter would not only help parents oversee their children's mobile device activity by type (watching movies, playing video games, browsing the Internet, etc.), it would also help the entire family better understand their usage habits, not just how much data they're using per month.
Say a parent could give a child access to three full-length movies and 30 minutes of Web browsing per month. In addition to setting expectations, this would help prevent unhappy surprises at the end of the month, as full-length films eat up a lot of data, and fast.
To add these kinds of parental control tools as part of shared data plans, operators should work closely with policy and subscriber data management solution providers like Tekelec, Amdocs, Openet and others that specialize in policy control.
Next-generation device plans
Over time, as carriers begin to offer next-generation devices like connected watches, embedded glasses and connected home devices with 3G/4G data connectivity, carriers will want to be flexible with their business models so they can creatively add these devices to their shared data plans.
Granted, in the near term, many of these devices will be embedded with Wi-Fi or Bluetooth and will not require use of a mobile data plan, but over time, as LTE SIM cards become smaller and the devices incorporate increased data capabilities, they will likely require users to subscribe to a 3G/4G data plan. I see two potential payment models. One is a "connected home" type of plan or a plan associated with a specific type of device, where all devices that fall into that category share a bucket of data--a "wearable clothing" plan, or a "connected appliance" plan, for example. The other would bundle the cost of connectivity into a larger service cost--a remote monitoring solution that leverages connected devices in the home to keep tabs on grandma.
"Unlimited" shared data plans
Although Sprint recently introduced some tier-based shared data plans for small businesses, to better compete against Verizon and AT&T and attract new customers, I believe Sprint will be the first U.S. carrier to offer "unlimited" shared data plans with no data caps. To do so, Sprint could leverage Clearwire's spectrum (if Sprint's deal for Clearwire closes). In addition, Sprint could leverage its partnership with Softbank, the No. 3 Japanese carrier, and try to replicate Softbank's success in gaining market share by offering disruptive shared data plans across a wide variety of devices like smartphones, tablets, cars and even bicycles.
Tier-based data rates
Even a simple idea like offering tier-based shared data plans with different data rates depending on the time of the day could be used as an incentive for subscribers. For instance, a carrier could charge higher rates during peak hours (e.g., 7:00 a.m. to 9:00 a.m. and from 12:00 p.m. to 2:00 p.m.) but lower rates during off-peak hours (say 10:00 p.m. to 7:00 a.m.). This would have the added benefit of helping carriers partially solve capacity issues during peak hours.
2012 marked the emergence of the first shared data plans in the U.S. In the next few years, I expect to see the beginning of a price war in the family shared data plan market between U.S. carriers. To stay ahead, we are likely to see the carriers embrace truly flexible and affordable shared data plans in the U.S for smartphones, tablets and next-gen connected devices alike.
Julien Blin is Directing Analyst for Consumer Electronics and Mobile Broadband at Infonetics Research. A mobile device expert formerly of Samsung, IDC, Ovum and Wedbush Morgan Securities, Julien now authors mobile, broadband and pay TV research and advises Infonetics clients. He can be found on Twitter @jblin.