Mobile phone operators that scrap unlimited data plans will stifle demand among key group of buyers
The mobile phone operators, led by o2, have announced they are scrapping unlimited data plans for users of smart phones. This may appear a shrewd move to finally extract value from the billions they invested in 3G licences but the more likely consequence is to dampen demand for internet on the move.
The o2 announcement of new “tiered tariffs” came just before the launch of Apple’s iPhone 4. Now fixed monthly payments will be supplemented by top-up fees for heavy users of web-based services, with other operators looking at similar structures.
“It has been the move to flat tariffs and bundles that has led to the take off of mobile internet,” said Paul Hudson, chief executive of Intersperience, the international consumer research specialist. “Most household bills for telephone, broadband and television are bundled and it is inconceivable that satellite and cable operators would consider going any other way now.”
Introducing a limit on mobile web use put the onus on a user to decide how much or how little data to consume – but most people have no concept of how much of their data allocation is used when they view websites or when apps connect to the internet.
It is highly likely that these multi-tiered tariffs will lead to uncertainty and a fear of consuming “too much” data. This in turn will limit the usage of mobile internet. Intersperience’s research study, Internet on the Move, found that even among enthusiastic users of mobile internet, 43% already say they worry “a great deal” about cost.
Most importantly, it threatens to put off Undefined Followers, the group identified in the research as essential to driving higher traffic.
Undefined Followers admit to having being seduced by marketing and word of mouth into buying mobile internet devices but have yet to define or understand exactly why they ‘need’ them.
Uncertainty over costs adds a barrier in their minds, something else that they have to learn and understand about an already unfamiliar technology.
The danger of scrapping unlimited tariffs is that this group gives up before fully appreciating the practical benefits the mobile web can bring to their everyday lives.
The cost of mobile services has been a constraint to growth since the market started to grow significantly in 2007. The majority of lapsed handset users (59%) cited high tariffs as a reason for no longer using internet services on their phones.