A fascinating article appeared last week in The Wall Street Journal. Not fascinating in its bare content, but more by its effect on traditional telco values and revenues. Not heavy on facts, the article mentioned that AT&T CEO, Randall Stephenson, had intimated that mobile plans that count only data usage are likely to come in the next two years and that someone, if not AT&T will offer such a plan where phone calls and texts will be just another form of data.
Mr. Stephenson may be shocked to know that some operators in Asia are already there, and that most mobile operators around the world are already delivering voice over IP in some fashion, even if still billing the old-fashioned way. Moving to LTE, where everything is data traffic, it would seem logical to move away from time- and distance-based billing and go data only.
Of course, the difficulty with this is that the market has been brought up on perceiving call values one way, and the idea that a call becomes just part of a bigger data charge may take some getting used to. The other point made in the article is that phone companies still make most of their money from calling plans and texting, which ‘use very little data’ and in order to compensate for the revenue fall-off they would need to raise data prices.
All this, however, is dwarfed by the fear of losing revenues earned for terminating calls from other networks and premium international traffic. But even this is starting to dwindle with regulators pushing down termination rates in many markets and Skype taking up a massive chunk of international call minutes.
What else came out of the article that sounds incredibly unlikely is AT&T’s idea of ‘letting’ websites or video services pay for the data used to access them, instead of having the data count toward the operator’s customer allowance. Whoa, I’m sure we’d all like to see that but what are the chances? The article’s author, may not have had a good grip on reality by stating “the idea, similar to ‘800’ toll-free numbers for websites, is more controversial, as it would let deep-pocketed websites make themselves more attractive than startups.”
This is not dissimilar to the ‘OTT player pays’ model that has never gained ground. Stephenson was quoted as saying that the ‘content guys’ were asking for it and that experimentation along these lines would begin next year, but not necessarily by his company. Who else would be likely to take up the challenge and how would it work? Is Stephenson suggesting that CSPs filter, restrict, throttle or even stop traffic to websites that are not willing to pay for traffic terminating to them? Surely this would entail millions of websites and become a logistical impossibility. It took us a long time to come to grips with interconnect billing between like-minded telcos, but this is something altogether different.
It’s not say it can’t be done as we have many examples of restrictive policy by CSPs and governments already in place. Where would that leave the ‘net neutrality’ camp? Debating the merits of such a scheme should also be encouraged, no matter how wild. As Stephenson said. “If you don’t allow those kinds of models to flourish, you’re going to inhibit the potential of these services.” Bold words, but who will be first to try?
First published at TM Forum as The Insider, 6 June 2012