Fair, transparent data pricing?

[Ben]

Mobile Today reports that the vast majority of smartphone owners are paying for a data allowance far in excess of what they actually need (http://www.mobiletoday.co.uk/News/20739/consumers_overestimating_data_needs.aspx). Given that it's almost impossible to estimate data usage in advance (you're far more likely to stumble upon a data hungry app than suddenly massively increase your calling minutes, for example), what would be a fairer way of charging customers for data?

I'd like to see a tiered and fully-automatic charging system. An example tariff might be:

100MB data included FOC
Up to 500MB data @ £2.50
Up to 1GB data @ + £2.50
Unlimited data @ + £2.50

As the user breaks through each barrier they could receive a text message alerting them that they have been charged an additional £2.50 and how much data that allows them.

Not only is this fair on low data users and high data users by ensuring each pays a fair amount respective to their usage, but it also means that those with sporadic usage patterns need not try to second-guess this and adjust their tariffs in advance. An 'unlimited' price band is important because I'm a strong believer that a price ceiling to the consumer encourages take-up of data-based services by removing the risk of an unexpectedly high bill.

I shouldn't imagine this structure is too attractive to the mobile operators as it'd almost certainly lead to a loss of revenue from low-data-usage customers. Such a mechanism may, I believe, already exist on some networks, though in a much less tiered and more punitive, rather than helpful, way.

[Hands0n]

Mobile Today is probably quite correct, today. But will it be during the July Olympics, for example. And will that particular event let the genie out of the bottle?

Fair and transparent pricing like Ben illustrates would be a nirvana for me. But then I suppose it all depends on what it is you're trying to do exactly.

I am a Three user with The One Plan plus All You Can Eat data, that also allows tethering which I use quite a bit from time to time. I get nowhere near the amount of call minutes and text messages. But data frequently exceeds 4GB in a month, some months I hardly break the 1GB volume. But for me that £25 is a peace of mind token that I will never be hit for out of bundle charges.

Contrast my Vodafone contract with 300 minutes, 3000 texts and 1GB of Internet that I remain nervous to use out of WiFi shot, and frequently hit up 700MB or more with moderate use and no tethering (it is my primary number).

If I didn't need tether I would probably plumb for the giffgaff service, the £10 Goody Bag with 250 minutes, unlimited text and Internet would do me fine. Quite a bit less than my incumbent set up.

I do think that all smartphone users need to think very carefully about those contract "deals" these days. I am more and more persuading folk to take a good long hard look at giffgaff (£10) and Three PAYG+AYCE (£15) coupled with a cheap smartphone or unlock what they have at the end of contract and use it. These days smartphones can be had for around £100 which over the life of the equivalent of a 18 or 24 month contract works out dirt cheap.

So a simple TCO model might look like this:



Unit/Mth Cost
18 Mths
24 Mths


Smartphone
£120




giffgaff
£10
£300
£360


Three PAYG+AYCE
£15
£390
£480


Smartphone Contract
£35
£630
£840



Just to be clear on the above table, the giffgaff and Three rows are on the basis of purchasing a smartphone for £120 outright. The last row, for a smartphone contract, does not include the capital outlay to purchase the smartphone. Rather, that assumes the MNO has supplied a smartphone as part of the 18 and 24 month commitment against which the other two propositions are compared.

You can play around with the numbers for yourself. But if you are happy with a modest smartphone along the lines of the new Huawei Ascend G (£100) or an Orange San Francisco 2 (£110) and with a bit of work to unlock and/or debrand, you'll make a bit of a killing versus a typical contract.

The masses will not undertake any of this, and that is what the MNOs exploit to their rather large profit. But if you're reading this then you're unlikely to be one of the masses :)

[miffed]

While what you suggest looks like a good idea, I am not too concerned as long as the term "unlimited" gets to keep its dignity ! I am a great believer in us all taking responsibility for ourselves

What I would like to see is awareness increased, people should know exactly what they are entitled to in terms of MB just as they know how many minutes or SMS they have - and it ought to be simple and idiot proof for customers to keep tabs on their allowance. This is another area where Three excel IMO, checking all balances is a piece of cake through the browser, you are intently logged in with no gaffing around and can easily see where you stand.

[solo12002]

@ Hand on: I am a Three user with The One Plan plus All You Can Eat data, that also allows tethering which I use quite a bit from time to time. I get nowhere near the amount of call minutes and text messages. But data frequently exceeds ?GB in a month, some months I hardly break the 1GB volume. But for me that £25 is a peace of mind token that I will never be hit for out of bundle charges.

I agree handson thats the reason why I went with three plus wall to wall 3g coverage in Northen Ireland, I agree I may pay more per month than I need but its the peace of mind that comes with this plan that I love. I also tend to buy all my mobiiles from web sites unlocked as I find over all the lengh of the contract I end up saving a bomb. I also tend to go for sim only deals wich offer a 30 day or 12 month contract, with all the benifits rather than being tied in to 18 or 24 months in a ever changing market place.