Wireless operators head into cloud with tiered pricing plans

EL SEGUNDO, USA: T-Mobile USA in May joined the swelling ranks of operators implementing tiered pricing plans for mobile broadband access, moves that will allow these companies to capitalize on the fast-growing wireless data market—and better position them to accommodate cloud services like Apple Inc.’s iCloud, new IHS iSuppli research indicates.

Following the lead of other US carriers including AT&T Wireless, MetroPCS and Leap Wireless, T-Mobile announced that it was eliminating its $30 per month unlimited data plan for smart phones and instead will offer subscribers a choice of four new tiered data plans. Other carriers in the United States, Europe and around the world also will adopt tiered pricing plans for mobile data, IHS expects.

“Tiered pricing plans deliver multiple advantages as the growth opportunity in the wireless market increasingly shifts away from voice communications and toward broadband data services,” said Jagdish Rebello, Ph.D., a senior director and principal analyst for communications and consumer electronics at IHS.

“In the short term, tiered pricing provides operators with tremendous flexibility to encourage increased data usage among average mobile broadband data users, while deriving more revenue from power users that engage in greater consumption of network resources. In the longer term, tiered pricing will allow operators to take advantage of and become relevant players in the new paradigm of cloud storage and cloud computing.”

From 2010 through 2015, global data service revenue will rise at a 9.1 percent compound annual growth rate (CAGR), more than twice the 4.5 percent expansion of the overall wireless operator business. In 2015, data revenue will rise to $337.9 billion, representing more than 30 percent of the total wireless service market, compared to just $218.1 billion and 24.4 percent in 2010, as presented in the figure.Source: IHS iSuppli, USA.

Wireless pipes get smart
Tiered pricing represents one of the critical elements of the strategy among operators to transition their mobile broadband networks from dumb pipes to metered smart pipes, and eventually to smart pipes.

Tiered pricing plans allow operators to implement billing systems that are flexible enough to accommodate market demand. They also enable entry-level pricing plans that can attract new data users. Finally, they support shorter contracts with limited or no subsidies for wireless devices.

Cloudy days ahead for mobile broadband
In the future, mobile broadband will evolve to support a cloud architecture that allows millions of applications to be accessed by billions of users around the world. Cloud solutions like Apple’s iCloud, Google Music Beta and Amazon Cloud Drive represent the first steps to offer consumers the option of storing music, video and user-generated content in the cloud, and then accessing this content anywhere on any device.

While Apple’s iCloud solution does offer some significant early advantages in terms of allowing content to be seamlessly synchronized on multiple Apple devices, IHS expects that enhancements to cloud solutions from Amazon, Google and others will increasingly encourage consumers to move content to the cloud.

Enterprise, productive and consumer applications also will move to the cloud, which itself will evolve beyond human devices to become the “Internet of Things,” as an increasing number of sensors and devices connect to the Internet.

In this cloud-driven architecture of the future, operators can become increasingly relevant if they implement and successfully execute a long-term strategy that puts the consumer at the center of the connected world. In addition to offering their own cloud solutions to the enterprise and consumer, operators will be able to monetize data flow by using service level agreements, quality of service guarantees and dynamically configurable pricing plans. Tiered pricing schemes will play a key role in attracting new consumers to the cloud and in supporting the needs of power users.

Source: IHS iSuppli, USA.