Usage-based pricing models loom
My ears pricked up the other night when I heard the following clip on my local news channel: “How would you feel about paying your iPhone bill by the byte? News at 11!”
AT&T reportedly has determined that 3% of its customers consume 40% of its bandwidth (many of them likely iPhone users accessing resource-hungry apps). As such, the carrier is mulling how to square the situation with potential incentives that will motivate the bandwidth hogs to reduce or modify their usage.
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This is just one anecdote on the road toward a future of cellular pricing that hangs heavy with questions. Mobile networks must eventually move to all-IP transport where consumption is no longer about minutes but about kilobytes and megabytes. That means allowing VoIP applications as circuit-switched voice networks disappear. Depending on how they price the IP service plans, voice could suddenly become a budget crusher.
The carriers have their work cut out for them figuring out how to price services when certain variables, such as net neutrality regulation, are as yet unknown. AT&T, for one, stresses that it needs to educate users about what they are actually consuming.
Indeed: a network manager recently told me that one of his iPhone users roaming outside the United States had rung up $97,000 in usage charges in a matter of just four days. The company is remaining mum about the user behavior that yielded these charges, but my bet is that there was heavy Netflix or similar usage going on over the mobile WAN, rather than a local Wi-Fi network.
For its part, Verizon Wireless does offer the following usage guide in the “terms and conditions” section of its Web site:
* E-mail (1 text page without attachments) – 3KB
* Word document (five 5 text pages) – 70 KB
* Typical Web page lookup – 300 KB
* Low resolution digital photo – 500 KB
* PowerPoint pPresentation (20 pages text & light graphics) – 3 MB
Most U.S. mobile operators’ domestic data plans tend to cap off at 5GB of usage in a given month before the per-kilobyte overage pricing kicks in. 5GB is about the amount consumed by downloading a single two-hour movie.
