The cost of carrying one megabyte of data over its LTE network would be half to one third the cost of carrying the same data over the company’s current 3G network, Lowell McAdam, Verizon Wireless’ CEO, says. That is going to be good news both for users and mobile services providers.
Bandwidth services providers universally need to improve the efficiency of their networks, since increased data consumption typically involves non-linear revenue effects. In other words, providers earn less money, on a revenue-per-bit basis, the higher the amount of bandwidth they provide.
And though consumers will not likely appreciate a gradual shift to buckets of usage, so long as the plans, pricing and consumption patterns are relatively closely matched, people can adapt. People are used to buckets of voice and text messaging, for example.
But key to crafting such plans is that they are viewed as fair. A lower cost, higher capacity network that works better for key applications such as voice and video is a likely prerequisite.
User patterns also are changing. Unlimited plans work quite well for users and providers when consumption is low. But most users consume more bandwidth over time, driven especially by video use, which requires an order of magnitude to two orders of magnitude more capacity than voice, for example.
Verizon’s coming shift to buckets of usage for multiple devices also makes sense. As users shift to use of broadband for multiple devices, they will not prefer paying for access to each discrete device. Also, usage profiles vary by device.
Cameras and e-book readers will not typically demand much bandwidth. Nor will voice applications. Smartphone web browsing will consume more, but smartphone data consumption typically is far less than from a PC. Blending usage from a range of devices, and allowing consumers to pay once, for access on all the devices, will save users money and provide more value while at the same time allowing service providers to offer service on terms that are sustainable.