Metered billing for wireless data, be it 3G or 4G, is not only the future, but it’s simply more fair. That’s the latest word from the ever-quotable Verizon Wireless CTO, Dick Lynch.
He pointed out to the Washington Post that the end of flat-rate pricing is simply inevitable:
“The problem we have today with flat-based usage is that you are trying to encourage customers to be efficient in use and applications but you are getting some people who are bandwidth hogs using gigabytes a month and they are paying something like megabytes a month. That isn’t long-term sustainable. Why should customers using an average amount of bandwidth be subsidizing bandwidth hogs?”
Analysts have also noted that the amount of wireless data traffic is rising, but the amount of revenue from that traffic is not rising proportionately. That of course makes it difficult to fund the network upgrades necessary to keep pace with network demand.
While Lynch did not outline any specific plans to go to a usage-based model for 3G, it’s likely that such a move would be a must should Verizon get the iPhone, as is rumored. The carrier is funding a next-generation LTE network this year that will gradually supplant its existing CDMA EV-DO data network. That means the latter is not scheduled for any massive network upgrades in light of its sunsetting status. So for now, successfully supporting the expected uptake of the device among the customer base of the nation’s largest wireless carrier – and the subsequent EV-DO network strain – might thus simply come down to managing bandwidth hogs through billing strategies.
Meanwhile, Verizon’s pricing for its 4G LTE network will probably consist of a flat fee, plus charges for excessive usage, Lynch told the Post. He didn’t clarify whether the model would mirror what we’re used to these days with a plan including a bucket of usage, plus high overage fees, or whether “premium” services – i.e. video and other bandwidth-intensive apps – would cost incrementally more on top of a basic plan. Another potential model would be simply a utility-bill type, with app-agnostic, per-byte metering.
Wireless congestion continues to make news, the latest being reports that iPhone users found themselves with virtually bricked phones at last week’s Consumer Electronics Show in Las Vegas, thanks to the massive show attendance driving AT&T’s 3G traffic past what the network could handle, allegedly. All major carriers have made noise about the issue of bandwidth hogs and the price-per-bit discrepancy, but unlike the rest of the world U.S. consumers are indoctrinated to expect flat-rate pricing. It will be up to the carriers to weigh the potential of churn from billing changes vs. the potential for churn from performance issues as data traffic escalates.