No turning back from unlimited data plans?

22 Feb 2012

Telcos should learn an important lesson about consumers in the Philippines: Filipinos want to have their cake, and eat it, too.

What was supposed to be an uneventful Friday in the online community last week was disrupted when Twitter suddenly went abuzz with reports that Globe Telecom, Inc., the Philippines’ second largest telco, was going to end its “unli” (unlimited) data plan soon. first broke the news Thursday morning about an interview with Globe President Ernest Cu, but it was months-old online news network’s article? posted Friday morning that triggered a barrage of comments from angry consumers. Remarks ranged from worried to critical and outright irate.

By Friday afternoon, Globe was already in damage control mode. Using her personal Twitter account, Globe external affairs head Charo Logarta replied to tweets, explaining that the “story was out of context” and that Globe “won’t end its unli data plan anytime soon.” The company, in fact, recently launched a $700-million network modernization program to improve its service She also reassured the public that Globe “won’t necessarily follow what bigger telcos abroad do.” Logarta was referring to the global trend of dropping what Ovum calls the “unsustainable” unlimited data plan. notes that Globe’s timeframe for its plans to discontinue unlimited data offers hinges on the uptake of smartphones in the country, which now stands at 20% of mobile subscribers. Meanwhile, Smart announced that it was sticking to unlimited data plan while ramping up the availability of its smartphones. It is banking on its “UNLIsocial” promo to encourage mass adoption of its Android phones, with unlimited access to social networking sites like Facebook and Twitter until March 31.

So, for now, the unlimited data plan stays. But there is good reason for Filipino consumers to be jumpy about threats of scrapping this offer. Last April, Globe adopted a fair use policy (FUP) that puts a usage cap to consumers who download data in excess of 1 GB a day. This cap is meant for the minority, which Globe describes as the “abusive” 5% of subscribers who use 80% of the available broadband Internet bandwidth in its network. But in a BusinessMirrorreport, Globe’s president lamented that the FUP was not enough to curb abuse, which also affects the company’s revenue stream.

Telcos can complain about revenue loss due to unlimited offers all they want, but in this age of buffets and eat-all-you-cans, the Filipino consumer will simply not buy it. The “unli” mindset is already well embedded in the psyche of telecom and internet users that any move to change this is sure to elicit a strong backlash. But weak and sluggish regulation has allowed telcos to slowly introduce restrictions and controls in its unlimited data offers, like the FUP.

How one defines fairness in usage is debatable. To the ordinary consumer, it is only right to fully exploit the services that one pays for (encapsulated in the local term, “sulit”). Applying simple business logic, a restaurant that offers eat-all-you-can chicken wings would profit from attracting more customers, most of whom are willing to pay a higher fixed price but would likely eat the usual three to five pieces. It is safe to bet that the possibility of a customer eating 10 chicken wings per visit would be very low, thus ensuring profit for the restaurant.

If the reaction of consumers to the Globe report were any indication, it seems clear that the Philippine market is not ready to revert to the pay-per-use scenario. A common sentiment is for telcos to expand their network and improve QoS instead of “punishing” their customers. At the end of the day, consumers just want to know: How many chicken wings do telcos have in the freezer?

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