The One Disruptive Implication of Google Fi

Fi, the new mobile service by Google, has been criticized in some quarters for not being disruptive enough. With the caveat that many changes could come as the service develops, observers have argued that the retail pricing isn’t really all that unusual, not especially affordable, and that the selection of handsets is nil.

All of that might be true, for the moment. But there is one huge shift in retail packaging and pricing that Fi does represent, and it is odd that it comes from a firm such as Google, which might be presumed to favor unmetered or unlimited usage.

Generally speaking, telecom service providers have preferred metered usage based on consumption. Generally speaking, Internet app providers prefer unlimited and unmetered usage plans.

The reason is simple: access provider make more money when users pay for what they consume, while app providers arguably make more money when usage fees place no constraints on the amount of app usage.

The reason “buckets of usage” exist is that Internet service providers, mobile service providers and fixed network service providers are trying to slowly wean customers off of the notion that Internet access literally is “unlimited.”

Conversely, for those services whose demand is plummeting (voice and messaging), service providers now offer “unlimited” plans in place of the buckets or usage-based billing that once were the industry norm.

Again, the reasons are simple. With demand dropping, the network has plenty of spare capacity to support “unlimited usage,” especially when end user demand is highly predictable. Also, because of the high predictability of usage, and low bandwidth impact, unlimited plans can safely be offered because few customers will actually use very much of the resource.

Fi might be the first significant change in thinking about what sorts of plans are most “consumer friendly.”

Up to this point, the “consumer friendly” approach has been considered the uncapped or unlimited consumption approach. Now, Fi is arguing that it is the metered approach that is most consumer friendly. That is a huge shift.

In fact, most ISPs would prefer a metered approach for Internet access, as much as they would argue they benefit by offering “unlimited” use of voice and text messaging.

So, oddly enough, the real innovation Fi represents is a possible sea change in thinking about what form of retail packaging and pricing is most consumer friendly.
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