Between 2006 and 2009, the US mobile operator AT&T’s mobile data traffic grew by a whopping 4932%[1]. This was the period when the US witnessed its first real wave of smart phone uptake, with penetration jumping up from below 20% to around 40%.
There are three reasons why this coming of the "data wave" was actually not very good news for the industry.
Firstly, operators were offering “all you can eat” data packages to subscribers which meant that as usage grew faster than revenues.
Secondly, moving data packets over mobile networks was threatening to become costlier than the revenue itself.
Finally, lesser and lesser of what users were spending on web-enabled services were resulting in new revenue streams for the operator.
With data usage shooting up, but costs threatening to spiral and revenue growth getting limited, you can probably see why the industry got into a huddle about data profitability and growth. Let’s go back to our US example to make sense of these three reasons:
My prediction is that India will see a surge in smart phone uptake from around the end of 2015 onwards. Why?
Device price points, form factors and replacement cycles are all converging. Mass uptake of services might follow a year or two after that (by the time applications providers and operators offer services which appeal to the mid-tier user).
So I’d say the industry has anywhere from two to four years in which to start the journey to a network transformation that enables Indian mobile data users to have a good data experience using handsets, laptops or tablets, whether at home, office or on the move. To be successful, this strategy needs to manage costs and enhance customer experience.
One thing that AT&T and others did to stem the tide of cost growth as mobile data exploded was to introduce “tiered pricing”, linking customers’ per month tariffs to “slabs” of data usage rather than leaving it completely unlimited. That’s a great way to prevent cost from spiraling at the outset, but a long term network strategy is needed to enable us to be free to do what we want, at the right price, and have a great experience.
[1] Source: Merrill Lynch estimates, 2010
The thoughts and opinions shared here are of the author.
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