iPad Killed Wireless Unlimited Data Plans

With the coming of the iPad, we started to hear about MiFi, tethering and mobile hotspots.

The case for the MiFi is simple. You pay a single data plan for your MiFi (or your smartphone with tethering), and there you connect all your iPads, laptops,  iPods,  and any future connected mobile device with Wifi. As LTE comes, you just get one unlimited LTE data plan for your MiFi and that is all you need from the Telco! A single pipe that you take with you anywhere!

Heaven for the consumer!! Hell for the Telco!!

Still wondering why AT&T, Telefonica O2, Vodafone and other telcos STOPPED offering unlimited data plans soon after the iPad arrived? They have four good reasons for that:

  1. The obvious: Tiered plans avoid heavy users to congest the network  (e.g. with P2P traffic). It also creates affordable plans to lure more users.
  2. The not-so-obvious: video is what drives traffic volume. Capping give telcos an (unfair?) advantage to distribute video content, compared with over-the-top. Example: Let’s say Verizon offers 1 GB data plan for your iPad and a Video-On-Demand App to stream all the movies you want at $8/month. The movies that you see with the Verizon App do not count for the 1GB monthly limit. Would you take Netflix at $8/month, considering it will soon kill your 1GB limit? Or do you take the Verizon video App?
  3. The real game: Telcos want you to get one separate data plan for each mobile connected device: One for your smartphone, one for your laptop, one for your iPad, one for your connected car, one for each of the future Machine-to-Machine connected devices. Telcos will bundle packages, but they want you to value each device connection with its plan and its cap.
  4. Protect Wireline: Telcos must avoid that LTE replaces the Wireline broadband connection. All fiber investment and IPTV play could go to waste if put to compete with 100Mbps+ Unlimited LTE plans. The easy differentiation: Wireline broadband is unlimited. Wireless broadband is capped.

The telco end vision for a consumer:

  • One unlimited wired pipe for the home (bundling TV and TV apps)
  • Many capped wireless pipes for each of the mobile connected devices, phone, laptop, tablet, car…  (bundling TV and other value-added services)