Tuesday, April 06, 2010

Is That a Data Subscription in Your Pocket, Or Are You Just Glad to See Me?

It's the dawning of the era of tablets. It's about 9:30 am for 3G, and daybreak for 4G mobile data connectivity. It's the evening of the era of overpriced WiFi franchises at airports. It's the mid morning of WiFi devices of all kinds, mobile and stationary. And, monthly, it's the arrival of the subscription bill for multiple family members' data subscriptions for multiple mobile data plans on multiple devices.

Multiple data plans are great for the network operators. Users have only one pair of hands, eyes, and ears, so users with multiple data plans are paying a multiple for one person's consumption of data. But, it can't last. Data, in general, is going to get cheaper, or it will stifle the spread of smartphones.

The well equipped mobile worker may have some combination of laptop, tablet, smartphone, game console, and e-book reader in his kit. A traveling family might be using one of each, rolling down the highway. Paying for a mobile data subscription for each device is unsustainable.

Currently, some carriers offer “tethering” plans enabling a smartphone to be used as a mobile data modem for a laptop. It costs extra (or it's a kludge that violates one's terms of servcie), and it does not solve the problem of consolidating one person's mobile data costs and uses across all devices, and under one price.

Mobile hotspots, like MiFi take one right up to the threshold of having this consolidation, with the very large exception of one's smartphone, which still requires its own mobile data subscription.

The ideal solution would put the mobile hotspot inside the smartphone, charging for one mobile data plan. It will be interesting to see just how willing carriers are to forego the revenue from two, or more, data plans a power user can bring.

4G carriers, like Clearwire, may see this problem from the opposite starting point: 4G networks will start out as purely mobile data networks, though there are both standardized and “over the top” (OTT) voice options for 4G carriers and third parties. 4G subscribers will either get “modem” devices for their laptops, or they will get mobile hotspot devices that can support multiple WiFi connected devices.

Voice and text message revenues are an incremental opportunity to these carriers. So, instead of putting the mobile hotspot into the smartphone, 4G carriers may, conceptually, put the phone into the mobile hotspot, creating handset-like smartphone devices that enable an OTT voice service. I say “handset-like” because these phones can do without the ability to make circuit switched calls. Telephony, on these devices, is just an application, not a radio (though they might throw in 2.5G mobile as a fall-back).

Instead of losing revenue through consolidation, 4G carriers pick up a bit of incremental revenue form marketing voice services, that can have advanced features like HD voice and video calls, on their network. The user gains both the true consolidation of data costs, and the convenience of having that packaged in a smartphone form factor that behaves just like a mobile phone for voice calls.