Data Hogs at the All You Can Eat Buffet
By Product Management | January 6, 2012
Something's got to give.
20 years ago I sat down at a Sushi bar in LA where for $25 you could order all of the sushi you want over the course of an hour. Seemed like a good deal.
Not 5 minutes into lunch about 12 players from the local football team came in and sat down for the same deal. In short order they effectively shut the place down cleaning the restaurant out of everything fresh and worth eating. I left the restaurant hungry and unhappy, never to return again.
With the All You Can Eat data plans available in mobile, carriers/operators face a challenge similar to those running a buffet. How to satisfy the needs of the power eaters without impacting the experience of everyone else?
A recent study cited in the New York Times points out that a mere 1% of all mobile subscribers are using 50% of all data bandwidth!
In a competitive environment you can't simply raise prices and spread the costs across the other 99% if you want to retain market share. The rank and file data users in the 99% are too valuable to lose.
But unlike a small restaurant, it's a bit difficult to comp the service and then kick someone out.
While abuse does occur in the 1%, that's not always the case. Many are early mobile adopters and have simply empaced the technologies promoted by the carriers/operators, handset manufacturers, and content providers.
What's more, the article goes on to say that data user will grow tenfold between now and 2016. The usage rates of today's data hogs may seem quite pedestrian years from now. The real issue operators/carriers face is how to pace for the future when our collective appetites will strain their capacity to keep up.
In the short term each operator is going to figure out how to deal with the high usage customers. Some predict that without a change data will soon no longer be profitable. Unfortuntely, while most users do not consume data at the same rates as the the 1%, they like the comfort of knowing that their data isn't capped and that they won't get a surprise bill if they should go over. To some degree the carriers/operators are at fault having set a past precendent by hitting consumers with high, unexpected bills for voice and text overages.
Now they need to figure out how to get everyone to pay their fair share without increasing churn. But, they cannot forget that the issue at hand is a supply issue and not one of demand. Choking off demand with tiered pricing is only a stop gap measure. They need to invest in the networks that will face continued pressure to keep up with the voracious appetite mobile consumers.
They need to be sure that these networks can deliver a good and consistent data download experience across the entire network and benchmark that experience against the market. They also need to ensure that a good download experience is available 24/7/365. Keeping the data hogs happy is important, but keeping the 99% from churning is the real key to long term success.