The Move Away From Unlimited Data: Who Is It Good For?

Unlimited data plans are the genie mobile operators are steadily stuffing back into the bottle. Though they have been wildly successful at enticing users to migrate to smartphones and take up data plans -- hence expanding their monthly expenditure with mobile operators -- many experts predicted at the outset that the all-you-can-eat model would be short lived. As unlimited plans exit the market (to a steady chorus of boos from many consumers), the question arises whether the shift away from them is good for anyone.

Hugh Roberts, an internationally recognized expert on communications billing and strategic consultant to some of the world’s leading operators, sets the gradual disappearance of unlimited plans in a greater economic context. Roberts says that "given the current economic reality in most developed markets" communications service providers in general have often "resorted to knee-jerk reactions focused on cost cutting" in an effort to "offset declining voice revenues." He says that hand-in-hand with these moves has been a tendency to exercise "claw back strategies such as tiered pricing in place of one-size-fits-all subscriptions," but questions whether these moves truly benefit operators in the long term. "The basic choice is a balancing act," says Roberts, as service providers must choose between "all-you-can-eat" which may drive customer retention, and "usage based pricing" which may result in near-term average revenue per user improvement—"but at what cost?" The real problem for operators, says Roberts, is that while unlimited data plans have been a "useful entrapment mechanism" as part of an overall offering to customers, "it was not, is not, and can never be an end-to-end sustainable business model." Operators therefore face a tough task as they must "re-educate and incentivize customers to accept changing realities," Roberts says. Consumers, Roberts argues, are likely to get the short end of the stick in the near term as unlimited options are taken away.

(11/21)