Early indications are that Apple’s iPad is a resounding success amongst critics and customers alike ‘gushing’ with enthusiasm. The first release versions only provide for wireless access via Wi-Fi so their impact on mobile networks will not really be known until the 3G enabled version arrives later in April. Mobile operators will, no doubt, see this as a mixed blessing as those selling the device, or specific tariffs geared for it, will stand to gain new data customers, but at the same, increase the load on already stretched networks.
Word from the USA is that savvy operators will use the launch of the iPad and subsequent wireless data-heavy devices to introduce premium quality, usage-based services that do not offer ‘all-you can eat’ data. Marketing departments will really have to perform miracles to pull that off and I suspect there will be considerable incentives offered, including heavily-subsidized devices or discounted apps for those taking the new plans.
Both Verizon and AT&T have pointed out that tariffs must make those who consume the most network resources bear more of the costs, especially with operators investing huge sums in additional capacity and new networks. But this is not necessarily the view taken by all mobile operators, many of whom believe that the real challenge is to tap into revenue streams that do not involve charging consumers more. They prefer to look at advertising-supported services and fees levied on content owners for optimized delivery of their products. Others are looking at embedded wireless for consumer or industrial applications, where the carrier takes a fee from a device maker or apps provider. That could be challenging, not just to implement but also to measure!
As Caroline Gabriel reports in a recent article in Rethink Wireless, “AT&T is more wary of such models, which remove the carrier’s brand and control from the equation. It favors new devices for increasing the number of wireless deals – targeting penetration of three wireless subscriptions or more per head, whether invisible or not – and has an advanced program in this area. But as its iPad deal with Apple showed, it is still prepared to offer subsidies in order to retain the customer lock-in and relationship, rather than going for the full open access retail model.”
This takes into account another theory not often espoused. If a mobile subscriber has only one device with one connection or SIM card, then that is his primary access to the mobile network. If he has more than one device and only one connection, he can only connect one device at a time to the network. But, if he has multiple devices and multiple connections, he suddenly becomes a high-value customer.
As most smartphones have the ability to connect via Wi-Fi and 3G, most consumers prefer the faster, and often more consistent, Wi-Fi option. Mobile operators may need to work out how to promote this, especially if they provide both services. They should encourage the development of apps that automatically direct traffic to the lower overhead or cost option. Wi-Fi in this case, could be seen as a lifesaver, offloading much of this traffic from the 3G/HSPA network. As mentioned earlier, it will be interesting to see if the iPad will be a largely Wi-Fi driven product. Most users will probably not want to sign up for an additional mobile data plan for the iPad and will be attracted to the lower upfront and running cost of the Wi-Fi only versions, or will buy the dual-mode model but only use 3G occasionally. Now, there is good reason for a prepaid model with multiple usage tiers for the iPad.
There are other means to control data usage abuse on networks including traffic-shaping, policy management, bandwidth throttling and speed bands (pay more, get more), but these are not always popular with customers and even less popular with regulators, as some Hong Kong CSPs recently discovered.
Creativity appears to be the key and the time is now. Marketing departments should perhaps refocus on how to sell viable and profitable data plans to their customers rather than traffic generators that are placing stress on the networks. The people that work this out first could become very popular indeed!