Data shake-up coming? Blame the bandwidth hogs
The days of flat rate all-you-can-eat mobile data could be numbered: that was the warning coming out of Mobile World Congress (MWC) this week in Barcelona.
Operators have offered unlimited data plans for smartphone and 3G dongle users as a way to drive uptake and usage. The problem for operators now, however, is a small percentage of their data users are consuming the vast majority of network capacity.
During a Q&A session after his keynote speech at MWC, Google CEO Eric Schmidt was asked about how Google can help operators make the most of network resources and manage the mobile data explosion.
Schmidt conceded the current data plan model is unsustainable for operators, telling delegates: "I don't want to paper over the fact that people are consuming massive amounts of data because they're adopting more modern browsers. This is a shared problem."
If the operators give out information about network congestion, Schmidt said Google might be able to play a role in easing their data pains - by helping networks be more adaptive to users. But he added: "I don't think that's going to be enough."
Tiered pricing is the only realistic option left to operators to cope with the massive increase in data consumption, according to Schmidt.
"Operators will all be forced to do various forms of tiered pricing and other ways to deal with the top one per cent, five per cent user," he said. "Realistically... operators will all be forced to do that one way or another."
This stands in contrast to last year's MWC when Google's VP of engineering, Vic Gundotra, talked up flat rate unlimited data tariffs, saying clear pricing - and better mobile browsers - were boosting mobile data usage.
And Alcatel-Lucent CEO Ben Verwaayen - who also gave a keynote at this year's Congress - said operators are going to have to 'retrain users' expectations' - from all-you-can-eat data to "please accept the value I can offer you".
"'That's a hard sell and still we have to do it," noted Verwaayen. "We can only transform [as operators] if we transform the business models."
During the Q&A Schmidt was also asked whether mobile users will "feel" like customers of operators or customers of Google in five years' time. "My actual view of this is that the customer will be a customer of both," he said...
..."The relationship that the operator is going to have with the device is going to get much more sophisticated - the operator will have... a billing relationship, a support relationship, an educational relationship, a platform relationship if you will," said Schmidt.
"Google will also know more about the customer because it benefits the customer to tell Google more about them. The more we know about the customer, the better the quality of searches, the better the quality of the apps - [the two relationships are] different, however, the operator one is required if you will, and the Google one will be optional."
While a "minority" of mobile users currently choose to furnish Google with personal information to improve the experience of using the company's web services, Schmidt predicted this is likely to change: "Today I would say a minority choose to do that but I think over time a majority will - because of the stored value in servers and software and so on."
Responding to another question - about privacy concerns stemming from Google owning so much personal data - Schmidt said: "Google is particularly sensitive to these issues. We've taken a strong public position, we're not perfect, we occasionally make mistakes but we're trying very very hard. Ultimately privacy will be legislated because it will become so important and it will be legislated on a per country basis."
The Google CEO was also asked about the company's intentions regarding fixed networks - in light of the 1Gbps open fibre network trial announced in the US recently. Schmidt said the aim of the trial is for Google to learn and share the information with the industry.
"We are not going to be investing in broad scale infrastructure - we are going to have the operators do it," he added. "We're not getting into that business, it's a very tough business - it's not a business for which we're very well optimised."