This is the year we need to re-think the approach to data pricing. In 2009, most of the activity was around "all you can eat" plans. But the world is changing rapidly and we need a different "structural" approach. My thoughts on pricing revolve around five themes.

1. More Flexible Options for Mobile Broadband.

Mobile broadband pricing, still averaging $60 per month from the major operators, is too expensive for most users. Mobile broadband growth has slowed significantly over the past 18 months, a result of both the recession and the fact that the first wave of growth of this market was driven by mobile professionals, who are less price elastic and whose employers, in many cases, are footing the bill. The next wave of mobile broadband users - and the target market for the panoply of netbooks, tablets, and other assorted devices with embedded wireless modems - is more price-sensitive, and usage patterns will be different. We need less expensive, and more flexible options. For example, we should borrow a page from the WiFi model and introduce per day/week/month pricing for the occasional user. Additionally, more appropriate pricing plans are needed for the growing number of pre-paid/advance pay customers, and others who prefer not to be on contract. Charge them the retail price for the wireless modem (or allow tethering), and provide a variety of options that meet their needs. There might even be an opportunity here to take business away from paid WiFi, for those whose mobile connectivity needs are occasional.

The approach for iPad wireless pricing is a start, with the "basic" $14.99 per month plan option and lack of contract requirement. But there should be a discounted or "shared device" rate for anyone already on an AT&T data plan. In the end, I think a minority of users will opt for the extra $200-400 device charge and $200-400 annual service charge for cellular connectivity, unless there is a broader re-think of approach for multiple connected devices. Cellular data on the iPad is "nice to have", not "need to have".

 

2. Thumbs Down on Metered Pricing, Thumbs up on Bucket Plans for Data

The second issue is how to deal with the overwhelming demand on data networks being caused by smartphones. The operator's $30/per month "data plan" gets under water, and quickly, when some devices exceed 1 GB/month of usage. Several operators have said that the "all-you-can-eat" concept is not sustainable, and all are looking at different pricing options. I think "metered" pricing for data, where customers pay X per megabyte, is a bad idea. It is difficult for customers to have a good grasp on how much data they are consuming at a given point in time. And there are so many factors outside their control: friends who send large files; embedded ads that are bandwidth eaters; inefficient apps or operating systems; and so on. Customers don't want a cloud hanging over every video link or photo sent.

 

A "bucket" plan approach (X dollars for X megabytes) makes more sense, with a "gold-silver-bronze" type structure, similar to what we have for voice (X dollars for increments of GB). In order to avoid excessive "overage" charges (read: consumer backlash), safeguards should be built in. For example, the customer would be automatically elevated to the next price tier when exceeding their bucket allocation, maxing out at the price of the prevailing flat rate plan. Another safeguard would be to caution customers if they are about to undertake an activity (such as downloading an iTunes movie) that might break the bank. For very large files or network-taxing multimedia applications, operators could encourage customers to use WiFi, if available, or charge a premium if customers insist on using the WAN.

3.  Better Accommodation for Groups

The family plan concept has been a huge success for voice service in the U.S., but it falls apart where data is concerned. Data pricing today is "primary account" centric. There are not good options for families to add "lines" (read: devices) at a discounted rate, or to share a data plan across a group.  A good place to start would be to allow family plan members to share data "buckets", as described above, similar to how voice minutes are shared today. Sprint's AnyMobile Anytime Family plan is a step in the right direction but is still "line"- and voice-centric, and requires a significant contractual commitment. How about Any Device, Anytime?

Businesses could also take advantage of this concept. I would love to see USB dongles that can be shared across a work group, with easy, Web-based authentication for each device/individual in the plan. This would be a great option for small businesses or groups whose users travel only occasionally. 

 

4. Price for a Multi-Device World

A couple of years down the line, the typical household will own multiple smartphones, and a mix of mobile-embedded laptops, netbooks, tablets, game players, and e-readers. Today's pricing structure does not work in this scenario: it is monolithic and simply costs too much to have multiple devices, each on their own separate, and less than optimized, data plan.

We also need to recognize that every individual and each device has different data "requirements". For example, a smartphone requires smaller amounts of data but on a more "constant" basis, while a tablet such as the iPad will be more "peaky" - requiring a bigger chunk of data but with less frequency. A mobile-enabled gaming device might require lower bandwidth but better latency. Some individuals have a near constant connectivity need, while others might have WiFi where they usually are and their WAN needs are more intermittent.

 

My recommended approach here is to allow multiple devices to share in a data plan. It makes no sense to require customers to buy a separate data plan for their smartphone and laptop, considering the narrowing delta in capability between these devices. They should be permitted to spread their 5 GB or whatever across as many devices as they like. My-Fi, Overdrive, and Verizon's approach for the Palm Pre are good first steps, but they are essentially a "master-slave" structure, requiring the user to have the primary "modem" with them in order for other devices to share the connection. I do believe these sorts of devices represent the future mobile connectivity framework. For example, a user has a smaller form factor version of the My-Fi, or a "primary" device with cellular data and Wi-Fi connectivity, and a plan with their operator for X number of GB per month. Other devices are then "certified" to draft off of that device, similar to how multiple PCs can share in iTunes. 

 

Allowing multiple devices to share in a data plan should also be expanded to the group concept. I should be able to configure on the "My Account" page of my service provider the ability to assign which devices/individuals are allowed to share in the data plan, and perhaps assign a limit to each. Again, not dissimilar to how voice minutes or text messages are handled in a group setting today. 

5. Voice is Part of the Equation

Over time, I see the distinction between voice and data being eliminated, especially when voice can be carried effectively over 3G and 4G data networks. The concept of "metered voice" (ie. minutes) has essentially been eliminated from the telephony nomenclature - except for wireless plans and international calling. I believe voice will become the "commodity", with the "meter", so to speak, being thought of more in the data construct. Alternatively, voice will be an application, as part of the overall service plan one will have with their operator. For example, for those on "Triple Play" type cable/FiOS plans, voice is essentially a giveaway, in that it is by far the lowest cost element to the service provider. We're not that far away from that construct in wireless, too.

If the twin phenomena of device proliferation and data network consumption explosion continue as we all expect it will, the industry must start to think more creatively about how to effectively price services in a way that properly balances consumer needs, network capacity and economics, and the right for operators to make a decent return on their investment.