Tiered Mobile Broadband Pricing "Inevitable"

Tiered pricing--where higher amounts of use will result in higher prices--is inevitable, say analysts at Coda Research Consultancy, driven by U.S. mobile data consumption toward 327TB per month in 2015.

With compound annual growth rates of 117 percent, tiered pricing for mobile internet access will become unavoidable, the company predicts. Most of that increase will come from video, which is growing at a
138 percent CAGR to reach 224TB per month in 2015. At that point, mobile video will represent two thirds of mobile handset data traffic.

The key problem, though, is peak demand, at only some cell sites, as already is the case.

“As carrier networks now stand, network utilization will reach 100 percent in 2012 during peak times," says Steve Smith, Coda Research Consultancy co-founder. That is going to mean actual blocking of access during peak hours, much as users on older fixed networks once experienced occasional "fast busy" signals that indicated no circuits were available for use.

Use of pricing mechanisms will help, as it always does, by allowing consumers to make choices about their consumption. Many object that tiered pricing will face huge opposition from consumers conditioned to "unlimited" usage.

I suspect that will prove wrong. Buckets of usage already have been accepted by consumers who understand they can pay less for lower buckets of use, or more money for higher or unlimited use.

What users manifestly do not like is unpredictability; uncertainty about how high their bills will be at the end of the month. So long as consumers have accurate ways to measure their own usage, and an ability to adjust their plans as needed, without penalty, users will adapt easily to buckets of broadband usage.

In fact, consumers may well appreciate being able to decide for themselves whether they want to pay more to get more, or can simply adjust their usage at certain times of day, or at some places, or delay using some applications, in exchange for lower prices.

Mobile video users will grow at about a 34 percent CAGR, to reach 95 million users in the U.S. market in 2015. Use of mobile social networking will grow at a 21 percent CAGR to 2015.

Non-text-messaging-derived data revenues will climb at a 17 percent CAGR, and will comprise 87 percent of all data revenues in 2015, says Coda.