“In a capacity-constrained environment, usage-based data plans, increased pricing, managing the speeds of the highest volume users—these are all logical and necessary steps to manage utilization,” Mr. Stephenson said in a January conference call with analysts.   ANTON TROIANOVSKI And GREG BENSINGER, Wall Street Journal.

There’s going to have to be an option that serves those with real-time needs and those who get their data later.

Bob

Why? Because the traditional landline companies have acquired or at least dominate the wireless world and if they run true to form – which they have been for well over a hundred years – they will allow network build outs to follow demand; not precede it. Build it and they will come only fits into their business model when a credible competitive threat appears on the horizon. Do they innovate – yes, of course, but only for two reasons: capturing a new revenue stream (texting) or upgrading technology (circuit/packet switching from point-to-point). By the way, I’m not singling out telecommunications companies in this myopia; all businesses have a tendency to follow this logic.

Mobility provides its own special set of circumstances because there are so many variables and this is where I think things could go. For example, mobile data users seem to be drawn to specific kinds of data use: Traditional Users – email/text/downloading/voice, App Centric Users – all the traditional plus Siri-esque apps that constantly touch servers including navigation variations, and finally Low Latency Users. Low Latency Users are just plain data junkies; gaming, video streaming, and other continuously updating applications that eat up data and have to arrive and be assembled in order. They cannot help themselves and suck every megabyte they can get their hands on through the latest devices that are fully capable of drawing it in.

This is how I believe the wireless network providers will capitalize on the user’s megapixel needs; data plans will move from gigabyte accumulation to download speed.  They do this now on landline data circuits and variable bit rate (VBR) real-time data is charged at a premium. The difference is in the delivery. In a physical building you can adjust Class of Service (CoS) and alter bandwidth capacity; you can’t do that in wireless unless you want to maintain both a 3g and 4g network. I don’t think that makes sense from a busines perspective. It also doesn’t help alleviate the demands put on the system. You could say Traditional Users would be 3g and App-Centric and Low Latency Users would be 4g, except you’d be cannibalizing one for the other, as well as having complaints because the Traditional Users will be experiencing growing pains as they migrate in behavior into a 4g realm. The customer service costs would be prohibitive.

My basic axiom about all this still holds true: They can’t make you make more phone calls, but they can make you want to use more data. So, how do they recoup their network investments and maintain a profit? Charge you for access. I have no inside information on this and perhaps someone else has already pointed this out, but in terms of dead reckoning this is where things have to go. For those of us who rely on mobile data, our only alternative is wi-fi which kind of defeats the purpose of mobile data because they’re not secure connections and you have a number of geographical and access restrictions based on where you set up.

Nope. They got us right where they want us and there are fewer options out there in terms of network providers. Of course the carriers will expand 4g and continue to make improvements to their networks, but again only to add new revenue streams and keep up with other technologies that could threaten their position. In the meantime,  costs will go up gradually with various explanations. I also believe voice will be rolled into the plans as a baseline because the vast majority of mobile devices are still used for calling.

So, what would the plans look like? Predictions can be dangerous, but here goes. I would assume unlimited voice calling will be part of the smartphone package: Traditional User plan: $75-80, App-Centric plan: $100-120, and Low Latency plan: $140-150. As you can see, the Low Latency users will add about 30-40% to the network providers margins and offer users a pain-free option to download whatever they want. Of course there will be plenty of little add-ons and some caveats that will alter prices another $10-20 a month, as well as taxes, fees and surcharges.

When will this happen? In the next 1-3 years depending on device and app development which is the vehicle for and content drivers of mobile data.

I’d be curious of your thoughts on this.

This is one where your IT and Sourcing people need to work together.  It will be important for your IT people to try to anticipate what it will take to “deconstruct”  the solution and implement an alternative.  Your sourcing people will need to make sure that this is factored in.  The danger is that no one gets a pat on the back for avoiding a problem 3-5 years in the future.  And 3-5 years in the future most of the people working on the current solution will be gone.  Leadership can make sure that this has been factored in, and most importantly documented.