One of the more remarkable aspects of 4G data in Australia is that, to date, we haven’t had to pay any extra for it. If you have a suitable device, neither Telstra or Optus charges extra for using the 4G network, a factor which has undoubtedly driven rapid uptake of the technology. But are we kidding ourselves if we imagine that will continue indefinitely?
The consensus from experts would seem to be ‘yes’. Right now, telcos have a vested interest in having both business customers and consumers use 4G; it helps reduce congestion on existing 3G networks, which increases customer satisfaction overall. And 3G remains the main game. Telstra, for instance, has the largest 4G footprint right now, but that still only covers 40 per cent of the population. Telstra’s rollout should see that hit 66 per cent mid year, but even that still leaves a third of the country firmly in 3G territory.
In the long term, market watchers expect that local carriers will emulate providers overseas and begin charging a premium for the higher speeds which 4G provides. Those speeds themselves are variable, and inevitably become lower as more users sign on. But they remain faster than 3G, and ultimately that difference will be a potential source of income.
Cisco’s global technology policy VP Dr Robert Pepper pointed out earlier this week that in the US, where 4G-branded plans have been on sale for longer, there has been a notable shift. “The initial deployment looks very similar, but over time one of the things that operators have done is their 4G plans begin to look different from the 3G plans,” he said. That’s not always reflected in price; it can also change the way the service is delivered. “In the US there were unlimited data plans for 3G but moving to 4G,, they’re no longer unlimited — they come in step functions.” We haven’t seen unlimited mobile data in Australia, but shaping is a potential tactic that could be used.
Telstra actually promised to introduce shaping on mobile data back in 2011, but two years later it hasn’t yet managed to do so. Whether that means we’ll suddenly see shaping applied to 4G remains to be seen, but it’s certainly not out of the question. Shaping can help you save money by eliminating excess data charges, but it can also be a sneaky means for providers to minimise network saturation.
The level of hype around 4G can blind us to the fact that it remains a niche technology. Cisco projects that by 2017, 4G will account for 12 per cent of mobile data traffic in Australia, a distant second to 3G’s 77 per cent. However, 4G will consume 40 per cent of the data total. Charging more for that data is going to be a hard temptation to resist for cash-strapped telcos.
Another potential route is to charge an extra fee for each device attached to the network. Again, this has been pursued with success in the US. “The leading US LTE operators have shown a remarkable maturation of pricing strategy as they continue to increase ARPU [average revenue per user], moving from flat rate pricing, to tiered pricing, and most recently to multi-device pricing plans, effectively monetising the consumer trend to multiple devices,” research firm Analsys Mason pointed out in a recent research note.
We might not have the confusing range of technologies marketed under the 4G banner in America — here, LTE is being deployed by all three carriers. But it seems naive to assume we won’t see these techniques at some point.