Flat Rate Billing of Mobile Data to Lose Ground to Bandwidth-Reactive Charging & Lifestyle Plans

July 20, 2009 - PRLog -- Flat rate, all-you-can-eat pricing is the most popular way for telecoms in Europe and North America to charge for mobile data services.

However, an analysis paper just released by Technology Research Institute (TRI), argues that flat rate billing alone can't sustain itself in the future because it puts a cap on revenue while opening the floodgates to unrestrained and costly radio access bandwidth use.

"Mobile operators who depend on flat-rate pricing for mobile data are experiencing the calm before the storm," says TRI research director and paper author, Dan Baker. "But when mobile data reaches mass markets, when the number of mobile applications explodes, and as users steadily demand higher and higher bandwidth levels, operators will need to supplement their flat rate plans with bandwidth-reactive charging and lifestyle plans."

TRI envisions operators in developed markets following those in Asia-Pacific, Latin America, and even East Africa where mobile data is gaining good traction in part because many operators there offer mobile data based on fees for specific services, applications, and content.

As mobile telecoms in North America and Europe steadily evolve to more usage-based charging, TRI sees parallels to the airline industry where the price of airline seats is automatically adjusted based on the number of seats left on a flight or the number of aircraft available to fly.

"Just as airlines have built systems that quickly react to a sudden change in seat availability", says Baker, "in the future mobile operators will need to become more "bandwidth-reactive" -- charging the right prices at the right times, but also, if extra bandwidth is available, bumping some economy-class customers into first class service".

To enable the move to bandwidth-reactive charging and control, TRI feels telecoms will need to invest in a more flexible and integrated charging and control platform, one that coordinates the essential functions of deep packet inspection, charging, policy management, and policy enforcement as shown in the diagram below.

The platform not only allows operators to efficiently allocate bandwidth among users of various lifestyles, it also enables on-line, in-session dialogues with subscribers that keep off-line customer care cost to a minimum.

Finally, as WiMax and femto cell technologies emerge, distributed charging and control will enable the selective redirecting of high bandwidth traffic to lower cost DSL and cable connections.

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About Technology Research Institute

Founded in 1994, Technology Research Institute (TRI) is a market research and consulting firm that specializes in the areas of OSS/BSS software and telecom IT services. For further information, visit www.technology-research.com or Tel: +1 570-620-2320.