Mobile data users’ biggest fear: Huge overage fees

Mobile operators can use rate plans to help shape customer consumption of scarce mobile broadband data, but with the unlimited usage “genie” out of the bottle – particularly in the US – they must be careful to craft options that users will tolerate.

Among the options that look the most promising: hitting heavy users with bandwidth limits rather than expensive overage fees and charging for unlimited bandwidth on a per-app basis – for a fee.

Those are among the key findings in a new study released today by policy server vendor Camiant. The findings, released at today’s Broadband Traffic Management 2009 event in London, were based on a questionnaire sent to 263 users, mostly in Western Europe.

In general, European operators have been more aggressive in using tariffs to shape mobile usage, something US operators are going to have to consider as smartphone use coupled with unlimited data usage appears to be exploding here in the states, said Randy Fuller, vice president of business development for Camiant.

There are essentially three ways to address this challenge, and operators are working on all three: increase capacity with new 3G/4G radio access and backhaul equipment; install deep packet inspection (DPI) and policy infrastructure to monitor and shape usage; and dovetail that policy approach with rate plans that aim to control demand or put a more realistic price on consumption (see related stories: It's Only Fair: Telcos manage IP traffic to dictate fair usage; Uncapping data: Vendors explore alternatives to mobile Internet quotas). DPI and policy vendors, including Camiant, Allot and others, have tweaked their platforms to function specifically in mobile environments.

“The context here is that bandwidth consumption is growing significantly faster than revenue,” said Camiant’s Fuller. “In mature mobile markets, voice and SMS are flat or declining. Mobile broadband is growing and can make up that business, but because use is growing so quickly, the question is: Is this a long-term sustainable, profitable business given how much it costs to add network capacity?”

In particular, the survey results points to what Fuller called a “bandwidth-value gap” – service providers are essentially teaching their customers that mobile data is no less expensive to deliver than wired data, a notion that is unsustainable given the high costs of 4G infrastructure, he said.

One approach to managing that demand is to institute data caps and overage fee-style plans. Up to now, such approaches have been hit and miss. “We’ve talked to lots of operators, deployed interesting things,” Fuller said. “But they’re still nibbling around the edges.”

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