Contrary to the view from some analysts, recent results from Three UK show that there is little prospect of halting the tide of mobile data.
Since the heady days of early all-you-can-eat mobile data tariffs, in the last couple of years we have reported on a trend of UK mobile network operators limiting mobile data usage by increasing prices, introducing restrictive data caps and applying high charges for out-of-bundle usage. The motivation for this was to protect the limited capacity of their networks, as they realised the potential for mobile data services to consume this voraciously.
However, with a smaller number of customers than its competitors, a relatively large spectrum allocation and the early deployment of advanced 3G technology such as HSPA and HSPA+, Three UK has been able to buck the trend. Over the past year, it has re-introduced all-you-can-eat data plans for both contract and pay-as-you-go smartphone users:
- in December 2010 it introduced all-you-can-eat data to The One Plan contract, offering large bundles of voice minutes, text and all-you-can-eat data, at prices from GBP25 per month
- in March 2011 it introduced its All In One pay-as-you-go bundles, priced at GBP15 (with 300 voice minutes, 3000 texts and all-you-can-eat data) and GBP25 (with 500 voice minutes, 3000 texts and all-you-can-eat data) for a 30-day period
- in October 2011 it enabled all new and existing contract smartphone users to benefit from all-you-can-eat data for an additional cost of GBP3 per month on their contracts.
Three highlights the importance of giving “peace of mind” and “eliminating data fear”, to encourage its customers to make the most of the data capabilities of their smartphones. It clearly recognises the attraction of unlimited use of smartphone services and apps, and it is exploiting its advantage in data capacity to make the most of this. In September 2011, Three reported that The One Plan was its most popular contract tariff and its all-you-can-eat data bundle was its most popular pay as you go option.
The consequences of this approach are apparent in the mobile data usage figures for the New Year period at the end of 2011/start of 2012. This week Three UK reported that its smartphone users consumed a combined total of 154 terrabytes of data on New Year’s Eve and New Year’s Day, compared with just 28 terrabytes the year before – an increase of 450%. It expects smartphones to become even more significant over the coming months, with ownership approaching 100% of its customer base during 2012.
Three’s experience demonstrates the pent-up demand that exists for mobile data, and this will become ever stronger as the benefits of smartphones and their apps become apparent to users and developers. It will be increasingly difficult for operators in a market to resist this demand if they have competitors like Three offering all-you-can-eat data. While it may not be palatable for their investors, substantial investment in new technologies such as LTE and LTE Advanced will be the only option to satisfy demand and remain competitive.