4G World: Benefits of the shared data plan

As customers begin to own multiple devices there is a need to consolidate usage into one shared data plan.  According to a white paper put out at 4G World by Infonetics Research (Campbell, Calif., U.S.A.) and sponsored by Tekelec (Morrisville, N.C., U.S.A), shared data plans will allow multiple devices to dip into one data plan, making billing easier and reducing shock billing. 

 “Not only are separate data plans per device expensive,” says the white paper.  “They also frequently give users a higher total data allowance that they can actually use across devices.”

A shared data plan can work with one user on multiple devices, or multiple users on multiple devices. 

For one user with multiple devices, the same data plan can be used for a person’s smartphone, tablet, Netbook, embedded laptop, USB card and mobile router.  According to the white paper, carriers could charge a $5 per month provisioning cost for multiple devices on one plan.

With multiple users and multiple devices, such as a family plan or small business, multiple people can use one data plan for individual and shared devices.  For example, a family of four with three smartphones, a shared tablet and two netbooks could all use data from the same pool.  According to the white paper, shared data plans between multiple users consolidate subscription and billing to coverage everyone, no longer requiring multiple accounts.

Although not yet implemented in the United States, many carriers in Europe including Orange and Vodafone, as well as Rogers Wireless in Canada, have already implemented shared data plans.  Below are examples of these existing shared data plans provided in the white paper:

  • Orange Austria, France, Spain: Offers two devices per data plan, bundling 600 minutes, unlimited texts, unlimited WiFi access, and 2GB shared data across both devices.  Cost: $138/month at 16GB rate.
  • Vodafone Ireland: Offers shared mobile broadband for business users with 5GB limit, shared across however many users are required. Cost: $10 per connection per month, with each additional increment of 5GB being another $14.
  • Rogers Wireless: Offers various plans: 1GB plus unlimited social networking to seven sites for $30/month; 4GB plus unlimited social networking to seven sites for $50/month; option to add an additional 1GB for $15/month or to add voice.

According to the whitepaper, AT&T and Verizon Wireless have both said they plan on using shared data plans in the future. 

But, if carriers make it cheaper for users by having a shared data service between devices, how will they still generate revenue?  According to the white paper, carriers are fixated on legacy revenue generators and haven’t looked at new ways to differentiate services.  A shared data plan has potential for new revenue streams, such as increased device adoption (as in upgrading to a smartphone or buying a tablet), as well as new service offerings.  Shared service plans could also improve customer loyalty and reduce the churn rate, making the lifetime value of the customer more profitable.

For example, on the France Telecom network a customer can get a 16GB iPhone 4, with 600 minutes, unlimited text, and 500 MB of internet data for $48 per month.  On a shared plan, as seem above, a customer can have two devices per data plan, 600 minutes, unlimited texts, unlimited WiFi access, and 2GB shared data across both devices for $138 per month at a 16GB rate.  The shared data plan increased the data amount, provided WiFi, and included two devices, making the price beneficial for both the customer and provider.

Furthermore, providers have the opportunity to put devices, which normally would be used through Wi-Fi, on their 3G or 4G network.  Tablets are a perfect example.  For the most part, tablets are used through WiFi because users do not want another data subscription on top of a smartphone.  According to the white paper, a shared data plan will make it beneficial for the user to connect their tablet via broadband, predicting that 15% of tablets will be sold on shared data plans by 2015.

With a consolidation of users and devices onto one plan, providers will eventually see a decrease in the average revenue per user (ARPU).  According to Randy Fuller, director of strategic marketing at Tekelec, there is going to be an industry shift toward lower ARPU’s, but it is going to be a universal shift.  With shared data plans, the revenue stream will be different, therefore making ARPU less meaningful in future financial results.

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