The end of unlimited data is nigh

My thoughts this time come courtesy of several recent industry comments over whether wireless operators can continue to offer unlimited, flat-rate data packages, which many operators have been doing since the inception of data services a few years ago.

In a report filed early this month on ZDNet Asia, Canalys' principal analyst Daryl Chiam noted it is no longer sustainable to offer unlimited access as "that is a very costly way of selling spectrum".

Chiam, who was commenting on Singapore telco M1's launch of new mobile broadband plans which no longer included unlimited data, told ZDNet Asia in a phone interview that the new plans were not a "surprise", as many telcos globally have already made the switch, including Verizon and AT&T in the United States.

"Telcos' move away from unlimited data plans should also come as good news to mobile broadband subscribers as they will no longer need to subsidize heavy data users," he pointed out.

Currently, as far as I know, M1's rival, SingTel, doesn't offer unlimited data plans while StarHub, the only player that does, conceded that Singapore operators may have to review current pricing plans and consider introducing usage-based data pricing to ensure network quality for their customers remains optimal.

In Malaysia today, all major operators do impose a data cap on their respective bundled plans, but they're implemented with different twists on offer. For example, Maxis continues to charge a user after his all-you-can-eat data ceiling is reached, causing him to potentially run up his bill without his knowledge, as has happened to one of my friends.

DiGi, on the other hand, lowers your access to EDGE speeds when a user breaches the ceiling data threshold on his package. Essentially, the data usage this way is still unlimited but no one would want to continue surfing at turtle-like speeds.

The ZDNet Asia report also elicited some divided responses from Singaporeans as to how they felt about the termination of M1's unlimited data plan. One customer was very vocal, stating that he did not like the idea of the termination of the unlimited data plan.

"I think there is no valid reason why the telcos should take away unlimited data," said Timothy Yang, a writer. "If [there's] congestion in their networks...it's not my problem--it just shows that the telcos have not done enough to ensure that their capacity matches demand."

While operators in Malaysia have yet to cut off unlimited data packages, I suspect that at some stage they would, and consequently, customers' responses to such a move would be similar to Yang's.

The plain truth is that mobile broadband users are so spoiled for choice, and competition has indeed brought a whole new level or service to them that taking away unlimited data plans could possibly invoke the feeling of their "rights" being taken away--which is what I believe turns people off.

However, to simply continue offering unlimited data packages can't be the way to go for operators. The fact is that while wireless technology is always improving and new standards are a lot more efficient than before, radio spectrum is not an infinite commodity and sooner or later, it will run out--no matter what kind of wireless technology any operator uses.

To me, Yang's solution of getting operators to upgrade their network is over simplistic and while his suggestion seems easy to implement, the reality is far from that.

There are a lot of other considerations that operators need to take into account such as spectrum re-usage, and adding capacity where it makes commercial sense. Upgrading a network is not as easy as just adding new equipment or cell towers.

Also, there is an issue as to whether those who hog the bandwidth should be paying more premium for doing so, while the rest who can live within their given limits pay the same prices. This issue will certainly dominate the industry going forward as Singapore soon, and Malaysia later next year, begin to deploy Long Term Evolution (LTE) networks.

As Ovum analyst Nicole McCormick warned in her recent report, operators should be careful not to repeat the mistakes of some 3G operators that overburdened their networks due to unlimited pricing.

"While LTE delivers video more efficiently than 3G, operators offering flat rates for LTE could quickly overstretch their LTE networks and find themselves having to invest more than expected to alleviate this congestion," said McCormick.

In her study of LTE tariffs of nine markets she noted that "big bucket and unlimited pricing dominate LTE offerings across the globe".

"LTE--as a 'new' service for consumers--gives operators an opportunity to new premium pricing schemes," McCormick said. "But, in general, we were disappointed to find a lack of innovation from these LTE first-mover operators in packaging and pricing LTE tariffs for blue-chip customers."

To deal with the issue, Malaysian mobile operators would need to put significant effort into re-educating its subscribers that unlimited data plans may be a thing of the past and that tiered pricing is probably the way to go forward.

After all, it was these same operators that created the insatiable demand for mobile broadband in the first place as at one point in time, they wanted to ramp up subscriptions.

Unless they do so, and do so quickly, expect more backlash to come from hungry bandwidth users, who may shun the new services that these operators will be trying to launch.