Will Data Caps Change Behavior, Business Arrangements?

Tensions within any ecosystem always exist; they are built into the structure of ecosystems where one role's inputs are another role's outputs, and vice versa. So as data caps start to become the norm for broadband access, there should eventually be some adjustments within the ecosystem. For starters, app developers will have some new incentives to think about how user behavior might change if content such as advertising starts eating into data allotments.

On the other hand, as mobile access providers look for ways to replace revenue they are losing from voice and text messaging plans, for example, there will be new incentives to craft business partnerships. A mobile provider might work with app providers to exempt video advertising or other bandwidth-intensive ads and promotions from the caps, for example. That will involve some form of economic value flowing between the app provider and the access provider, but it is an easy matter to predict it will be looked at, at the very least.

Nickhil Jakatdar, who is co-founder and CEO of mobile startup Vuclip, said he has been debating this issue with other entrepreneurs for a while now. He noted that in emerging markets like India, data plans have always been limited, so in one sense U.S. carriers are just following the lead of other countries.

That could be bad news for any mobile app or service hoping to make money through advertising, and definitely will be an issue for over the top video entertainment providers. "As a consumer, I am not going to be to happy if five percent of my data cap was used by ads," Jakatdar said.

That is doubly true for online or mobile video entertainment offers.

Jakatdar predicted that as tiered data plans expand in the United States, we'll see more mobile companies moving away from a purely ad-supported model, and towards models where they partner with carriers on data or premium services.

Verizon's Wireless Data Caps May Not Mix With Rich Media Advertising on Phones | Adweek