With all of the hoopla surrounding tiered pricing and the prediction that the whole world will eventually move that direction, a new report from Current Analysis is painting a far different picture when it comes to mobile broadband trends in Europe.
While operators in the smartphone market are replacing unlimited pricing plans with tiered plans, unlimited pricing in the mobile broadband market--characterized by connectivity via laptops and tablets--is growing at a swift rate. The firm said that the total number of mobile broadband products marketed as "unlimited" has increased 62 percent during the past year across the 17 European markets the firm tracks.
"The recent industry debate around the replacement of unlimited data smartphone plans with tiered alternatives has in no way been reflected within the marketing of PC connectivity [mobile broadband] plans," noted Current Analysis' Emma Mohr-McClune. "What's more, unlimited plans are most commonly found within Europe's most mature and network-progressive [mobile broadband] markets; the same markets exhibiting the lowest per GB average retail pricing. All this should come as a concern to those operators set to launch LTE networks ... With ‘unlimited data' already an established [mobile broadband] marketing fact for HSDPA, what chance has LTE in offsetting a fixed-mobile substitution (FMS) revolution?"
The same trend may be occurring in the U.S. market. Clearwire (NASDAQ:CLWR) and Virgin Mobile recently introduced portable WiFi hotspots and contract-free unlimited mobile broadband data plans--via the Clearwire Puck and the Virgin Mobile MiFi. And Comcast recently added the MiFi to its High-Speed 2go Nationwide (3G) mobile Internet service bundle for no additional cost.
I wonder if the growth of portable WiFi hotspots among operators also undermines the movement toward tiered pricing on the smartphone side. As PC World recently pointed out, AT&T (NYSE:T) iPhone customers could pay $15 for the minimal data plan and instead go with Virgin Mobile for $40 per month for unlimited data on a portable hotspot that could be shared among the iPhone, the iPad, a laptop and other WiFi-enabled devices. This would be cheaper than paying $25 for 2 GB of data plus $20 for tethering on an iPhone and another $25 for 2 GB of data on the iPad.
Indeed, in August, Clearwire introduced the iSpot, a personal 4G/WiFi hotspot that has a month-to-month price of $25 for unlimited data use and is aimed at iPhone and iPad users.
Of course, there's that initial outlay for these devices, and savings that amount to a few dollars a month. But the value goes up if subscribers plan to use a significant amount of data or add several devices to the portable hotspot.
Does that put the squeeze on AT&T? Roger Entner, senior vice president and head of research and insights at Nielson's telecom practice, points out that AT&T has the heaviest data usage of all U.S. operators, and would gladly take a subscriber's $15 for not using the AT&T network or at least using it very minimally. "Traffic would be killing someone else's network," he said.
Still, AT&T is banking on lower-end $15 users migrating up to the $25 plan as their data needs grow. Competitors--mobile operators, cable companies and even retailers like Best Buy--are likely to look at ways to lure iPhone and AT&T's other high-end smartphone users by making these alternative offerings even more attractive. --Lynnette