Hot on the heels of yesterday’s post, recent industry news proves the point that customers may not understand, or be happy with, how they get charged for data. AT&T has been hit with a lawsuit saying that customers get charged for data even when, as far as they can tell, they are not using any data services. Read the story here (hats off to Tony Poulos for spotting this story – how does he get the news so quickly?) My superficial reading leads me to feel the suit is without merit, and that AT&T are probably charging for data which is transmitted just because that is how their services work, with no intention to cheat anyone. But it illustrates the point – data does fly back and forwards without customers being clear about what data is being sent or why. That means customers are not clear about what they are paying for – and possibly the telcos are not clear about this either. We live in a world where there are innumerable customer protection laws and regulations designed to make sure customers pay only for what they get and understand what they are getting. The principle applies to so many things – everything from the weight of cornflakes in a box to the electricity recorded at the meter. Why should data communications be different? Because data services are complicated… but that justification will only the take the industry so far.
More Mobile Data Dischord
Eric,
An interesting topic. One might even consider developing a (smart)phone resident RA app…
On the other hand, today’s run of the mill smartphone possess computing power same as a PC. PC-ISP connection is charged by QoS, eg connection speed.
Why phones should be treated differently. As a matter of fact quite a few CSPs around the globe already offer unlimited data, priced by connection speed.
D
IMHO, the charging of data by volumes is rubbish. Don’t get me wrong, I am totally in favour of operators needing to charge customers smartly for the data they use, or in other words monetize their investments rather than the ‘all you can eat’ data plans. It is just that the volume based data charging is like paying an escort by the number of strokes, if you understand what I mean :-)
Throttling was again a ‘brilliant idea’ but it only reduces the operational impact and does nothing to the Telco’s revenue, even if some customers are willing to pay for the extra bandwidth.
So is there a way possible, then? Well, yes. I see this happening more and more in service industries and this must happen as well in Mobile world – segmentation of services.
Here are two examples:
Packet Switching ( Gold/ Silver/ Bronze etc., class of services at different speeds)-
If you are willing to shell the extra buck- you get the top speeds in the network and all data browsing happens at top quality. (You get better streaming and less dropped calls etc.,), else for the same b/w you get best effort uplink and/or down-link depending upon the place where you browse. This does not mean you shortchange the customers who are willing to pay less, but you are willing to go a bit extra for those who are willing to pay more.
Now the technology to support this is not easy, and you are talking of Packet Labeling and Routing in the Operator backbone, but atleast it will ensure that b/w is used more effectively and monetized more efficiently.
Another form of segmentation could be by area – e.g., browsing with data from Central London during peak working hours may be more expensive than during non peak hours. That would mean the load on peak hours can be monetized more efficiently for those who wish to use their phones for data then.
Bottomline – segmentation will have to happen depending upon how the operator chooses to sell his business. But delinking the data and revenues is a sure way to disaster.
Disclaimer:The views are personal and do not reflect the views of any other individual or my organization.
Naresh,
You make a great point. I’m very encouraged to see this issue is getting people thinking. It highlights how the telco needs to have a complete view of everything: the customer, the handset, our marketing and price plans, what we tell customers, our business model, our infrastructure, and how our technology works. Maybe RA adopts this perspective on behalf of its telco. If not RA, somebody should. IMO, this issue is not new. It was relevant back when I was working for T-Mobile UK at the start of the last decade (!) and we were going through the regulatory audit to be the first UK operator to prove the accuracy of our billing for 3G services. Accuracy does not mean just whether our machines work to spec, but also whether the price we levy is aligned to the price that customers reasonably believed they agreed to. Throttling sits on that boundary – are we intervening because a few customers are unreasonable (the industry’s argument) or because we cannot deliver the promised value proposition, even to reasonable customers, because we are not dimensioned to cope with peaks of demand (the argument made by some customers)? Even if customers are ‘wrong’ (and the customer is never wrong) then what are we doing to educate customers to think the ‘right’ way? Or do we say nothing and hope they do not notice the potential issues because we don’t draw their attention to them?
When we were dealing with our UK billing accuracy regulations, key questions were being ducked. I don’t think any regulator, anywhere, has dealt with them since. Relevant questions include: what is a reasonable ratio in data traffic between payload and overhead; how much customers pay for overhead and whether they understand what they pay for it; and whether all data is being transmitted as efficiently as it should. This law suit is another example of how a gap can develop between customer expectations and what they get. Is the law suit unreasonable? I’ll leave that to the lawyers. But this law suit, and the issue of ‘phantom data’ with Microsoft 7 handsets, illustrates there are gaps between customer expectations and what they get. The only reason we are noticing now is that the market has grown to the point where customers are aware of discrepancies and are able to speak with a loud enough voice to be heard. The vacuum between expectations was always there. Regulators did nothing to close the vacuum, but telcos still have to deal with the risks rather than choosing to ignore them.