Mobile Broadband Strategies » Solving the Data Profit Puzzle

Yankee Group shares analyst insights on industry news daily in our free Mobile Now e-newsletter. Our Directions reports review the insights from the past month and provide an overview of the trends we see emerging in the space. In April, the mobile broadband market focused heavily on consolidation, from vendors to carriers, as well as the importance of remaining aggressive in the 4G market.

Mobile carrier startup ItsOn is promising to change how customers view mobile plans thanks to its new "pay-as-you-go" service called Zact. Customers will only pay for the minutes, megabytes of data and messages they use.

T-Mobile deserves big props for crafting a creative comeback strategy that drives its infrastructure, service, device and brand stories into the future under the "uncarrier" banner. Its launch captured press and customer attention. But now comes the hard part: turning customer interest into sales and building a monetization engine that delivers growth.

It's been rumored that AT&T is planning on launching a prepaid service, called "All In One" on June 15, and will likely offer a U.S.$35 per month service for feature phones and a U.S.$50 per month service for smartphones.

Freemium wireless service is starting to gain traction, especially since FreedomPop started offering its services. The company recently raised U.S.$4.3 million in funding from its current investors and has unveiled a data sharing feature.

Computer manufacturer Dell has launched a deal with Telefonica to offer Pay-As-You-Go (PAYG) mobile broadband services to European business customers. The service will be available under the name "Dell NetReady."

While a handful of non-U.S. mobile network operators have experimented with shared family or multi-device mobile data plans, U.S. carriers have been long on promises but slow on delivery. Mobile operators should view their initial efforts in this area as an opportunity to increase customer loyalty, reduce churn and speed customer transition to their new 4G networks while also setting the stage to deliver even more dynamic pricing schemes in the future.

Immediately following T-Mobile's decision to move toward contract-free wireless service, Verizon Wireless CEO Lowell McAdam said his company could do the same if the customers really wanted it. Just three weeks later, one man is testing McAdam's word with an online petition.

The emergence of shared data plans has locked in data tiers and caps as the foundation of mobile data pricing, particularly in the U.S. But things aren’t standing still. Shared plan hold-outs have countered with moves including a return to unlimited pricing, while cap stalwarts such as AT&T and Verizon are mulling a slew of new approaches that build on the foundations of tier-based pricing. The entire mobile ecosystem will be affected by what comes next.

Within the next two years, consumers will be able to choose data-only mobile device plans that consider voice and texts just another form of data. Thatâ??s according to AT&Tâ??s Randall Stephenson, who posited the idea at a New York investors conferenceâ??although he declined to say if AT&T had such a plan in the works.

To date, mobile broadband pricing has seen very little true innovation. Shared data plans? A family plan applied to data. Toll-free data? Well, that would be toll-free calling applied to the world of mobile data and content. But socially-driven mobile broadband bit-sharing? That feels new and fresh.

New phone-leasing models just hitting the U.K. market could lead to an almost complete de-coupling of mobile devices and servicesâ??and an end to handset subsidies.

Telenor's effective management of the move from voice to data is already producing an uptick in mobile revenue and subscriptions. Other European mobile operators would be wise to follow in its footsteps.

Just 90 days into the experiment, AT&T and Verizon say their shared data plans look to be a hit, swelling revenue and ARPU while reducing churn. Other operators--especially in the pioneers' U.S. stronghold--should look to follow suit, or watch their subscriptions and revenue erode, at least in the near term.

The days of MVNOs being satisfied (and profitable) serving the needs of low-ARPU voice and SMS users are numbered. A new breed of MVNO is building businesses around data, and operators must be prepared to respond.

AT&T's first attempt at cap-aware pricing--forcing users to move to its new shared data plans to gain cellular access to Apple's FaceTime video conferencing--breaks the rules for burgeoning off-cap approaches on so many levels it threatens to derail the entire concept.

While we've been hearing about shared data plans for a while, we didn't realize how radical they would be until Verizon Wireless tipped its hand (and now AT&T as well--albeit a bit less radically). To get on par with Verizon and compete in 4G, all operators must evaluate shared data and rethink how they can run their business with data consumption and accounts, rather than individuals, at the core.

The cost of acquiring customers in the age of smartphones and LTE is soaring. But while operators pledge to cut device subsidies, 4G promos and rebates, they seemingly can't resist new (and costly) lures. It's a dangerous game that in the end will tamp down share prices, leave unprofitable operators vulnerable to acquisition and trigger industry consolidation.

Despite Swisscom's and others' reports of severe declines in mobile voice and messaging revenue, this business is not collapsing. In fact, smart operators can actually profit from the IP app boom.

U.S.-based mobile operators are facing a formidable new threat from a previously benign quarter: MVNOs. While in the past, MVNOs traditionally pitched brand (i.e., ESPN), price (i.e., Tracfone) or youth (i.e., Boost) as their differentiator, a new wave of upstart MVNOs is going after traditional operators' most coveted demographic: advanced, tech-savvy (and highly profitable) customers.

Mobile broadband is a mature service. And that means mobile network operators (MNOs) need to stop complaining about traffic overload and start taking a more grown-up approach to managing it. If they don't, business model sustainability and data profitability will continue to elude them, especially as they make the move from 3G to 4G.