The 4G Menu Change: Good-bye All-You-Can-Eat; Hello A La Carte

by John Giere, Senior Vice President, Products and Marketing

From smartphones to netbooks to tablets, we are in the midst of a market frenzy as a new device seems to launch every week. The latest breed of mobile devices are lifestyle-built for consuming more and more data. As more people adopt these new devices, the closer we get to the ideal of consumer freedom: anytime-, anywhere-access to our information, entertainment and community.

But in this new era of mobility, not all parts of the value chain have evolved to accommodate the changing consumption habits. Alas, it seems that mobile service providers on several continents have received a healthy dose of negative press for their inability to change with the times and come up with appropriate data plans and roaming tariffs that fit the new devices on their networks. Smart devices need smarter data plans.

We are talking about mobile devices! Doesn't it seem a bit absurd that roaming is so consistently penalized and therefore discouraged? Infoworld's Galen Gruman has done a great job documenting "roaming rip-offs" and the options that exist for US, Canadian and European iPad users. Bottom line: it's expensive, confusing (may require knowledge of a second language or the use of color-coded SIMcards), and can ultimately lead to surprising data roaming charges, i.e. "bill shock."

The opportunity exists for entrepreneurial operators to move market share in their favor through new data pricing strategies that meet the changing needs of this evolving market. I have faith that mobile operators will see the long term benefits of good customer care versus the short term revenue gains of cryptic contracts. Now this may sound overly optimistic in light of recent announcements from Verizon Wireless and AT&T to replace unlimited data plans with tiered pricing on their 4G network. But tiered pricing doesn't preclude good customer service. Deutsche Telekom knows what I mean.

Yes, roaming is expensive for the operator too, but that does not excuse or explain away bill shock. I love the idea of time-based roaming passes (a day pass or hourly pass) with optional volume caps or even content-specific roaming subscriptions (e.g. a World Cup package). If you give consumers a clear way to track their own usage with optional threshold notifications, you’ve just created a framework where traveling users will be much more likely to accept data roaming charges while preventing the inevitable angry customer service call when the bill arrives.

But let's go a step further. If operators can reduce the aggregate volume of their roaming traffic they can pass the savings onto their roaming customers. Through content compression, caching and other optimization techniques, mobile operators could offer more diverse (and cheaper) pricing options based on quantity and quality.

Thus far, the iPad's predominant usage model has been pay-as-you-go. Unless this changes, I see a growing segment of mobile users accustomed to pre-paying for access as needed. Operators must address this valuable target audience by making it simple, satisfying and relatively inexpensive to cruise with their device anywhere they go. Isn't that what mobility is all about?