"Pay Only for What You Use" Aligns User, MVNO Interests

“Pay only for what you use” is the latest innovation in mobile data packaging, pioneered by Google Fi and now being adopted also by Republic Wireless.

Republic Wireless is shifting from “unlimited data” as a primary selling point to pay only for what you use as an alternate value proposition, as Google Fi has pioneered.

Under the plan, consumers get a refund for using less data than they paid for in the prior billing period.

The new plans represent an effort to create even more incentives for customers to rely on Wi-Fi access, rather than using a mobile network.

Presumably, users quickly will grasp that by relying more on Wi-Fi, their mobile data charges will be limited and they will pay less for mobile data, literally getting a refund.

So even if “pay only for what you use” is a usage-based charging system, the policy aligns end user and service provider interests. When more Wi-Fi is used, both consumers and the mobile operator save money.

The service providers offering the program are mobile virtual network operators.

MVNOs have to pay underlying carriers for wholesale services. So if MVNO customers use less mobile data, the service providers pay their suppliers less.

The trend is significant, with  some profound potential implications for retail Internet pricing. Up to this point, Internet service providers have tried to move away from “unlimited use” for a flat fee.

Instead, ISPs would prefer a consumption-based or “rated” system where customers pay based on how much they consume.

In other words, consumers who use more, pay more.

Oddly, consumer advocates generally have argued that unlimited usage for a flat fee is the fair approach, and have opposed rated usage.

Others argue that “paying for what you use” is the fairer approach, since heavy users pay for what they use, and are not subsidized by light users.

The new twist is the “refund” users get if they do not use all of their purchased data allotment. At the same time, such refund plans also are metered, rated or consumption-based plans.

In some ways, “pay only for what you use” mobile data plans are straightforward: giving users a refund when they do not use all of their data allotments is a marketing platform with clear advantages.