Shift to 5G Calls for a Revamp of Data Plans

Network Operators Must Rethink Unlimited Data Allowances

The mobile industry is going through a major change, prompted by the advent of LTE-Advanced and the dawn of 5G networks. The roll-out of network upgrades to support gigabit LTE in 2017 will deliver peak download speeds as high as 979 Mbps and sustained data rates consistently in excess of 100 Mbps.

However, there remains an important roadblock to this innovation. Put simply, mobile data plans choke the experience that the next generation of networks promises to deliver. Speeds well beyond 100 Mbps will mean little to customers, and will struggle to transform their usage if not coupled with flexible plans that enable them to use the service without fear of being charged if they exceed their allowance.

Recent weeks have seen signs of change, particularly in the US, where the return of “unlimited” data plans has been spurred by heightened competition and carriers’ acceptance that they need to adapt.

AT&T, T-Mobile, Sprint and Verizon all now offer plans that include uncapped voice and texts, and 22GB to 28GB of unlimited data. These are generous allowances for most users, at least currently, but it’s somewhat misleading to refer to such plans as “unlimited”. Without exception, the terms of the deals indicate that beyond the 22GB to 28GB limit, speeds may be slowed in areas of congestion. There are also restrictions on how the data can be used. All of these carriers allow 10GB month of hot-spot data but often limit speeds.

In Europe there are also signs that unlimited tariffs will become increasingly prevalent. For example, in the UK, Three offers all-you-can-eat everything — calls, texts and 4G data — on SIM-only contracts for £32 a month (about $40), but usage caps apply. But the best example is Finland, where consumption is based on different speed tiers rather than usage caps, so users pay a premium for an LTE-Advanced experience. These data plans really are unlimited and also include tethering. This has seen carriers promoting LTE for home broadband and resulted in per capita mobile data usage reaching 14GB per month.

If operators wish to gain customers, increase usage, justify network investment and maximize the capability of their networks for a better customer experience, they must continue to make progress in how they structure data plans.

One option is a model that offers a greater variety of data plans with a wider range of data caps. This could include a truly unlimited plan with no caps at a price premium supported by an abundance of tiered plans below it. For example, from 50GB down to 3GB. Instead of penalizing customers once they reach the data limit, operators could proactively encourage them to upgrade to a higher-tier plan. This would offer a better way to meet customer needs and build average revenue per user.

The recent steps toward “unlimited” are a reassuring sign of progress in support of considerable current and future improvement in network and modem capability. An important consideration for network operators must be that “unlimited” doesn’t mean the same for all users or all devices and objects connected to a network. Instead, they should think about how data plans work for specific users and in terms of the devices and services they connect.

Plans that scale and adapt easily without penalizing users will offer the best foundation for the shift to 5G. No one needs truly unlimited data. What people need are plans that are suited, and that seamlessly adapt, to their usage.