Mobile data boom could spell end to 'all you can eat'

A predicted massive rise in mobile data traffic could mean the end of unlimited 'all you can eat' data contracts for smartphones and tablets, according to an industry expert.

Data usage on mobile devices grew for the fourth year in a row and more than doubled during 2011, rising 133 percent, according to Cisco's Visual Networking Index report released on Tuesday. Web browsing, email, video calling and GPS/location services all require data transfer, as does any smartphone or tablet app that uses the internet.

At an event in London, Cisco predicted that by 2016, data traffic on mobile devices worldwide will reach 130 exabytes per year — roughly equivalent to 33 billion DVDs and 18 times the current amount. The company said growth in consumer traffic is driving the trend — accounting for 77 percent of mobile data usage — but noted it is becoming increasingly difficult to segment consumer from business traffic.

However, Gabriel Solomon, head of public policy for the GSM Association (GSMA), said this growth could mean the end of unlimited data deals — often referred to as 'all-you-can-eat' packages — for mobile users.

"The numbers today show that for many operators, one of the key drivers to get mobile data usage into the market, the 'all you can eat' tariff, is going to become an anachronism," Solomon said at the Cisco event on Tuesday.

"I don't think it's a sustainable pricing strategy, and we'll see more and more operators go to a tiered or value-based pricing," he added. "Clearly it's unsustainable if people who consume huge amounts of data are paying the same amount as people who consume little data."

Net neutrality

Solomon said the growth could give ammunition to businesses with an interest in making sure their traffic is prioritised on mobile networks — one of the issues at the heart of the network neutrality debate.

"Some [companies] are going to approach network operators and try and negotiate 'paid interconnect' terms so they can establish high quality of service, particularly for video," he predicted.

Regulatory economist Martin Cave said the way operators deal with the increase in demand on their networks, and therefore how much they will compete or align their pricing and packages, will in part be dictated by business rivalries.

"The mobile sector doesn't have hundreds of operators and has a limited amount of choice, so there's always... a tension between, on one hand, a tacit degree of co-operation among the operators, and on the other, out-and-out competition," said Cave, who has just been appointed deputy chair of the UK Competition Commission.

"Obviously, the more that any operator is running up against constraints on its output level, say because of spatial scarcity, the more likely it is you'll end up with a more co-operative solution, simply because there's no point in competing and winning business if you can't actually satisfy that business," he added.