Mobile Network Controls, Pricing Still Taking Shape
A top U.S. carrier and a major mobile infrastructure vendor acknowledged on Monday that charging for mobile data services is still a moving target.
While carriers think of mobile data on their networks in terms of bits, subscribers think of it as useful or entertaining content. Finding the right way to charge for those services is hard, executives from Verizon Wireless and Nokia Siemens Networks said during a panel discussion at the Open Mobile Summit in San Francisco. It involves both ensuring the network can handle the traffic and making sure consumers think they're getting good value, they said.
"The simplicity of 5GB or 10GB, or whatever, may not be so simple to the users," said Hossein Moiin, CTO of Nokia Siemens. "The value of the content and the quantity of data that is consumed are entirely independent of each other today."
The real problem is network congestion, Moiin said. He suggested carriers might charge more for data consumption during busy hours and less when the network is lightly loaded.
The tiered mobile data plans that Verizon, AT&T and others have recently introduced have sparked a heated debate over customer "bill shock" and the best way to allow new third-party services to flourish. The issues partly overlap with the debate over net neutrality, with Verizon and Google proposing to the FCC in August that mobile networks be exempt from net neutrality rules. The U.S. Federal Communications Commission is still seeking input on the issue.
The CTO of Verizon Wireless said his company hasn't found all the answers to those questions.
"The pricing structure is changing, has changed and obviously will continue to evolve," said Verizon Wireless CTO Tony Melone. But one thing that's needed is a way to make sure consumers understand how their usage is going to affect their bills. "You can't solve it on the back of consumers," he said.
To satisfy both consumers and the industry, there need to be both elegant and intuitive ways to deal with constraints on the network, Melone said. One example is switching the subscriber's connection to a Wi-Fi hotspot where it's available, without the user having to make a decision, and making the network adapt to changing coverage conditions by sending a smaller or larger version of a file, he said.
A content provider, MLB.com CEO Bob Bowman, told the panel that application and service developers already think about network capacity when building their products. MLB.com delivers online video and other media about Major League Baseball to about 10 million visitors a day, 37 percent of whom use the service on mobile devices, Bowman said. He expects mobile usage to surpass access on PCs next year.
MLB.com pays attention to file size, bit rates and other factors when building its mobile content offerings, Bowman said. For example, a high-definition video stream to a big-screen TV requires far more network capacity than a sharp-looking stream to a phone's display.
"(If) the user hits 'hi-def' on his or her iPhone, it's not truly hi-def, it just looks like it is," Bowman said.
Developers are tailoring their applications for efficient use of networks because they don't want to run up customers' mobile bills, Bowman said. "At a certain point in time, customers will want a good experience, but also an economic experience," he said. "We don't want customers thinking about, 'Can I use this app now?' That's a loser for all of us."
Asked about "best-effort" video delivery versus enhanced performance, Verizon's Melone said LTE networks have tools for "shaping" the user experience in ways that benefit carriers as well as subscribers and content providers. Those mechanisms are far more fine-grained than the ones available in the 3G era. But regulatory issues come into play as well, he said. "It is a dynamic situation and I'm not prepared to be explicit in terms of exactly what we're thinking along that front," Melone said.