• The new iPad has a 2048-by-1536 display capable of recording and playing video in 1080p HD resolution. Some of its models have 4G LTE connectivity as well.
• The combination of the New iPad with large amounts of data being transferred over 4G networks, and the motivation to do it (proliferation of video content, capability to play it at 1080p HD resolution), could result in customers draining the allowances of the most common monthly data plans in just minutes. E.g. a typical 10GB plan costing 80 USD could be drained by consuming 3-4 HD movies from iTunes (around 3GB per movie), and, after you consume your allowance you might be required to pay around 10 USD per gigabyte. So, for your next movie you will be required to pay, on top of the payment to iTunes, an extra of 30 USD. (see here, here and here for a detailed discussion)
• In fact, the temptation to consume large amounts of data, if price plans will be updated, could result in clogging 4G Networks (see this article that appeared in Technology review)
Certainly Apple’s New iPad is leading the herd, but obviously other tablets will follow with similar screens and similar data consumption capabilities and temptations.
So, how will this all evolve?
I can think of several scenarios:
Today, according to analysis by Localystics, only 6% of iPad App Sessions are made on cellular connections, and, according to a report by Chetan Sharma, “only 10% of the tablets (as of Q4 2011) were cellular activated”. So it might be that in the years ahead, tablets’ 3G/4G usage will remain, due to the network limitations and price plans, a niche… well, a big niche, but still a niche market. This will avoid many headaches from operators, but at the same time will limit their capability to gain from this market. I think that this scenario is unlikely, there will always a competitor aiming to gain market share by proposing a “make sense” data plan to tablet owners, and everybody else will have to follow.
In many markets today, cellular data is a commodity; the customers do not perceive a real differentiator in terms of quality of the network, so it is mostly a price war. New bottlenecks in the networks might transform the situation into a quality war, which might give opportunity to charge more, but not excessively, accordingly to the quality of the network or service provided on top of the network. This might be a temporal opportunity for certain CSPs, but history has taught us that in the telecommunication market, this is normally a temporary situation.
Obviously new price plans will evolve; tiered data allowances, policy based charging e.g. charge differently according to the congestion of the network at a certain time, self provisioning of ad-hock data and quality allowances, etc. These plans will not be easy to implement with “old” BSS systems and will require obtaining and managing information from new data sources. This will require more investment in BSS and OSS systems. Moreover, there will be a need to give the customers tools to follow-up and understand how they are charged, and for what; this is not so trivial – just giving the user a list of thousands of data sessions with URLs and Kb downloaded from each will not do the trick.
So far I wrote about cellular networks, but the impact will also be felt on home networks in which a family with 4-5 bandwidth-hungry devices working in parallel will suffocate the wire line internet connection and, obviously, the WiFi hotspots as well.
What does this all mean for Revenue Intelligence?
Today in many places, Revenue Assurance does not work hard on verifying data consumption measurement and reporting accuracy. Yes, most of the data plans these days have limitations, but the limitations are appropriate to the data needs of users, so over–the-limit charging is not deeply analyzed by RA. Billing verification of policy-based charging is also not at the center of interest for a typical RA department. Fraud today is rarely committed to obtain illegal advantage over data consumption plans. With the new reality, data transportation might be in the center of the CSPs operation revenues and growth. Remember, it is not just the tablets, but also the Smartphone, that will become more data hungry, so all these new realities will be at the center of tomorrow’s leakages and Fraud. Revenue Intelligence departments could wait until losses become big and then attack the problem, or, as I always recommend, they can be proactive and put the necessary controls and mechanisms in place today in order to protect the new growth engines as they become more and more important.