Mobile operator 3 has dropped the use of the word 'unlimited' in its marketing and doubled the data cap on the majority of its tariffs.
In characteristically strong terms, 3 chief executive Kevin Russell recanted his company's earlier policy of using the term 'unlimited' when advertising its voice, text messages and mobile data plans, when fair use policies were in place. Anyone going over 3's 500MB monthly fair use data limit gets charged 10p per megabyte, or £100 per gigabyte, over that cap.
"One of the dumbest things I've done — and [sales and marketing director] Marc [Allera] has done as well — is talk about unlimited data or unlimited anything when it's not unlimited," Russell said in a media briefing on Thursday. "It's not clear, not transparent and not honest. It's one of the few occasions where we have been led by what the rest of the market has been doing."
Kevin Russell, 3's chief executove, said the use of the term 'unlimited' in advertising was "one of the dumbest things I've done". Photo credit: David Meyer
At the same time, Russell and his team announced a doubling of the data cap on the majority of 3's contract tariffs, moving from 500MB to 1GB. The contracts covered include 3's Internet Texter 500 tariff, which costs from £20 a month, and all plans above price range. According to Russell, this represents three-quarters of 3's contract customer base.
People who signed up for a 3 contract within the last two months will get the increased data cap, as will any new customers. The operator also offers bolt-ons for those who know in advance that they will use large amounts of data, costing £10 a month for an extra gigabyte or £15 a month for an extra 3GB.
Russell denied that the move away from marketing 3's services as unlimited was spurred on the traffic generated by very heavy users of mobile data — a reason given by rival operator O2 when it did the same thing last month. At that time, O2 said 0.1 percent of its customers were responsible for 29 percent of its network data traffic.
"That's not the issue we're addressing here," Russell said. "The bulk of our data use is driven by mobile broadband [dongles]. I don't think the issue here is about the one or two percent [that are heavy mobile data users]; it's about transparency."
3 and O2 are not the only operators to start tightening up their mobile data policies. In May, Vodafone started charging its customers for exceeding their 500MB monthly limit. The use of the term 'unlimited' has also come under increased scrutiny, and the Advertising Standards Authority (ASA) asked the UK's advertising regulators last month to review its use by telecoms providers.
Vodafone has expressed a keenness to tier its mobile data prices according to bandwidth, in response to the mobile data explosion. Asked whether 3 is considering the same move, Russell said this will not happen "right now".
Allera pointed out that, while the tools to help operators segment their mobile data offerings in this way are coming, they are not here yet.
"It's important to try to keep customers' behaviour as simple as possible in mobile," Russell added. "To try to tier things and complicate things takes us backwards."
Russell hinted that 3 might next year introduce a way for customers to have one data plan that covers multiple devices. "It doesn't make much sense that Sarah Jones gets an iPad subscription and a mobile broadband subscription and a smartphone subscription," Russell said. "It's not sustainable. We have to address this as an industry.
"If you've got a data allowance, you should have the flexibility to use it on multiple devices. It's got to be the opposite of complex. It's something we're working towards — it's going to be a 2011 opportunity," he added.
The 3 chief executive also took a swipe at rival Vodafone, which has introduced femtocell technology — mini base stations for the home that offload mobile data to Wi-Fi when the user is within range — to cope with the mobile data explosion.
"You should provide the vast bulk of your [product] from your core infrastructure," Russell said. "If you're struggling to make [your capacity to handle mobile data demand] work well enough at this stage and you're falling back on Wi-Fi, I'm not sure what the long-term solution for your business is."