Abstract
Purpose: The revenues for mobile data transmission overtook the revenue of voice calls for the first time in 2014 in the USA. It can be observed that demand for mobile data – largely driven by video and cloud - is increasing exponentially, while overall data revenue is rising only moderately. This will lead to insufficient revenues stream to increase investments into mobile networks and ensure quality service. Consequently, hereof network performance will deteriorate sharply. At the heart of the problem is the current global pricing regime of fixed multiple MB/GB bundles, irrespective of time of the day, intensity of usage (e.g. video vs. email) and underlying economic value of the data. A new framework is proposed as to optimize and align network capacity and implicit data value/utility, which is crucial to ensure customer satisfaction and access justice.Methodology/Approach: The fundamental differences in pricing voice and data in voice and/or data centric networks are analysed in detail. Information has been synthesized as to develop insights into the impact of different devises and type of digital traffic for the overall performance of mobile networks. Based hereupon, a new framework for mobile data has been proposed to address the increasing misalignment between network capacity, usage and underlying data value/utility. Initial solutions have been proposed and discussed.Findings: While voice calls are easily quantifiable and are largely predictable in its occurrence and network load implications, mobile data traffic shows very large variations depending on type of traffic. While social media messaging by many customers consumes very little capacity, consumption of video streaming by relatively few customers can lead already to network saturation.Research Limitation/implication: Carriers set prices for a fixed amount of data – irrespective of intensity and time of data traffic - which leads to sharp spiky type of traffic patterns essentially signalling sharp overuse during busy hours coexist with large period of underused times.Originality/Value of paper: A new framework for proposition building and particularly pricing of mobile data services is provided.
Highlights
Since 2014 US mobile carriers will earn more revenues with mobile data than with mobile voice services
With large parts of the highly usable radio spectrum virtually completely allocated, the growing demand of both existing and new mobile communications services can ceteris paribus only be accommodated by replacing current systems with more spectrum efficient ones, or by the development and introduction of technologies that will allow certain mobile communications systems to economically operate in higher frequency bands that are less crowded
A variety of devices absorbing very different RT/non-real time (NRT) traffic at certain peak times, pose another big challenge that cannot be addressed by static data bundles alone
Summary
Since 2014 US mobile carriers will earn more revenues with mobile data than with mobile voice services. Since voice has been the key revenue driver for mobile carriers during the last 15 years, little price sophistication can be observed as of today, in the data space. There is a huge discrepancy between cost of providing mobile data capacity and revenue generation potential, if compared to voice services. The paper will systematically explain the differences between the voice and data centric world and systematically develops a new framework for pricing data services in order to increase data revenues to mobile carriers. This paper starts out by providing a basic understanding of the cost of building and operating networks. A new framework for proposition building and particular pricing of mobile data services is provided
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