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Telcos abandoning unlimited data

Operators turning to new pricing models for LTE and moving away from "burdensome" unlimited data plans, as experience shows this can be achieved with positive results, says research firm.
Written by Ryan Huang, Contributor

With high mobile data traffic growth and the management issues it brings, more telcos are abandoning unlimited usage plans, noted Ovum.

It issued a research note Friday saying there was now "solid evidence" that leading operators in Asia-Pacific, the United States, and Sweden were adopting this stance.

Nicole McCormick, senior analyst of telco strategy at Ovum, said: "These operators are devising new ways to transition to LTE (long-term evolution) without continuing to offer burdensome unlimited tariffs. Experience is showing that the move to LTE without flat rates can be achieved with positive results."

"The best method for the transition is to abandon unlimited tariffs from the launch of LTE. Operators should not feel compelled to simply roll over their existing pricing models," he added.

According to Ovum, this approach has been taken so far by SK Telecom and LG U+ in South Korea, SingTel in Singapore, and AT&T Wireless in the U.S.

McCormick also noted that other operators that initially offered unlimited LTE tariffs had also begun to change their pricing models.

For example, Hong Kong mobile operator CSL recently adopted a new LTE tariff strategy centered on volume-based pricing, which has proven popular with customers. He also pointed out that U.S. mobile operator Verizon Wireless had phased out unlimited data tariffs for LTE last July, and the move did not adversely affect its LTE uptake.

Some smartphone users in Singapore had earlier told ZDNet Asia that they welcomed such moves as well, since this meant they did not have to subsidize heavy data users if there were better tiered price plans.

"When transitioning to volume-based pricing models, operators should avoid complicated pricing structures. Instead, they should focus on educating customers on their data requirements and usage limits so as to limit the possibility of bill shock," said McCormick. She also recommended that operators introduce measures such as maximum excess usage charges for the same reason.

Ovum added that operators can look to exploit the "upsell" opportunities that will be presented by the shift to alternative pricing models, particularly moving customers to higher data allowances as data usage grows.

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