Nitin Bansal, Managing Director, Ericsson India
With mobile data consumption increasing rapidly, there has been a consistent shift toward mobile data plans offering more usage. Having said that, the most popular mobile broadband data plans globally are those with limits ranging from 2 to 5 GigaBytes (GB) per month. With mobile data consumption increasing, there is a consistent shift toward ever larger plans. However, there are steady customer segments at both ends of the scale, suggesting a demand for a broad mix of plans. Over the last 12 months, 6 to 7 percent of users globally have moved from a smaller plan to a plan with a data bucket larger than 5GB. Driving this shift is customers’ growing demand for more data, in combination with competition among operators to offer the most attractive packages. The trend also follows the incessant growth in smartphone capabilities and the continuous increase in network performance.
On the other hand, plans with an allowance lower than 100 MegaBytes (MB) per month and plans with an allowance greater than 50GB per month (including unlimited plans) – have had a stable proportion of the user base, representing 1 and 7 percent of users, respectively. These are customer segments with specific requirements: one price-sensitive group preferring small data buckets, and the other group paying a premium for an all-you-can-use price model. This highlights the need to provide subscriptions with a range of data plans to meet customer demands.
How are customers using data?
The choice of mobile plan usually reflects customers’ estimated needs for mobile data over the month. However, this does not always match their actual usage. On average, users on the smallest plans (lower than 100MB) go well beyond their limits. More than 60 percent of users in this group exceed their data allowance by over 200 percent, consuming data almost in parity with users of medium-sized plans (up to 1GB). Users of small plans do not seem to feel bound by their small data bucket, but rather consume data on a pay-as-you-go basis. At the other end of the scale, unlimited users cannot consume an infinite amount of data, and here the two economic groups differ in their behavior. In higher GDP countries, unlimited users consume around 20 percent more data than the users of very large but limited plans (10 to 50GB). However, those from lower GDP countries demonstrate an interesting behavior – consuming 40 to 45 percent less data on average per month than customers on very large but limited plans. Despite these differences, people in both groups buy unlimited plans for peace of mind. Consumers appear to pay a premium for the assurance of not running out of data at the end of the month. Maximizing usage is not their main priority.
The rapidly growing mobile data traffic
Plans with low-to-moderate allowances (lower than 2GB per month) represent around 35 percent of users and 12 percent of traffic in the networks. From a capacity point of view, these customers could be viewed as easy to serve. Consumers with medium-sized to very large data plan buckets (from 2 to 50GB per month) represent 60 percent of the user base and a significant 75 percent of traffic consumed. Of all the traffic generated by the users of limited plans, around 30 percent is consumed above data bucket limits. This allows operators to continuously upsell data through top-ups. In addition, this demand for more data plays a key role in the shift to larger plans.
There is no one-size-fits-all plan
The 2 to 5GB per month segment represents a sizeable proportion of the total customer base. However, the presence of stable, niche customer segments means that a good mix of plans will be important to address the variety of data requirements on the market. There is no major difference in preference patterns across the world. While the most popular plans have data limits between 1 and 10GB per month, there is stable proportion of customers at each end of the scale and higher growth is in the larger plans. Not only does this further highlight the need for a range of plans, but it also demonstrates that the shift towards larger plans is global. Plans with limited allowances represent 94 percent of the customer base and 84 percent of total traffic. Thirty percent of traffic from these users is consumed above the data bucket limits. As limited users pay by usage, this represents an additional revenue stream for operators. Unlimited data plans address a small customer segment. While there has been some concern about the increase in data traffic generated by users of unlimited plans, this traffic can be controlled through fair usage policies.