Accurate costing on data service trumps congestion

Tony Poulos
09 Dec 2010

At the recent Broadband World Forum in Paris, Alcatel CTO, Marcus Weldon, explained during a press conference that declining revenue per mobile subscriber and the rising cost per subscriber of operating a mobile network are "converging to the point of a lack of profitability." The network equipment cost per subscriber is falling, but this is still not enough to offset the rising cost per subscriber of operating the network.

According to Weldon, as more operators introduce tiered mobile data pricing in a bid to alleviate strain on their networks and boost revenue from heavy users, it will not be enough to make mobile data services profitable. To make matters worse, tiered data pricing could compound the problem.

"Wireless voice revenue is still offsetting the cost of delivering mobile data – this cannot go on," said Weldon.

Total Telecom reported that AT&T in June became the first big operator to scrap its unlimited data plans in favor of a $15 tariff covering usage of up to 200 Megabytes per month, and a $25 monthly plan offering 2 Gigabytes per month aimed at heavy users.

Weldon noted that AT&T's low-cost plan is cheaper than the average mobile data tariff, while its 2 Gigabyte plan is more expensive than the average.

"Data revenue could fall if a high number of users go for the cheaper plan," he said, commenting that even some heavy mobile data users might opt for a lower cost option while they evaluate whether they require a large data allowance." There's going to be an acceptance period as consumers adjust to the new structure," he said.

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