The concept of shared data plans has been floating around in the U.S. mobile industry for a while. So far, however, only Verizon has announced plans to offer them. This idea of shared data plans is based on the various family and business plans available from almost all major carriers in which multiple lines and corresponding devices are bundled as a single plan on a single account. That allows all the devices share the same pool of minutes.
While it seems like shared data would function in a similar manner, the issue isn’t quite so clear-cut from the perspective of mobile carriers. In fact, according to AT&T CFO John Stephens, carriers still aren’t sure how to configure shared data options or how much money they would make or lose by implementing them.
Speaking at the Nomura U.S. Media and Telecom Summit, Stephens talked about the uncertainty of shared data plans. The biggest uncertainty is how they will effect customer behavior and thus company revenues. As a result, he said that wireless carriers aren’t certain how to position or orchestrate shared data options.
Shared voice plans have a predictable effect in the U.S. mobile market. They lead to a slight decrease in revenue compared two or three family members having individual plans (whether under a single account or under separate accounts for each person). However, they also encourage families to purchase more devices. That adds additional monthly fees, can bump the overall number of minutes and texts purchased, and can lead to overages. Put together, that means that shared voice plans increase revenue overall.
The same impact is far from certain for shared data plans.
For one thing, shared data plans will be attractive to individuals as well as to families. A single person could consolidate several devices into a single data bucket like an iPhone and iPad or mobile hotspot. Provided they didn’t exceed the shared plan, the effect would be the same as canceling an account and the carrier would lose a decent amount of revenue.
The situation with multiple users and multiple devices is even more complex because of the number and variety of devices added to the mix. A family of four might combine plans for four iPhones, two, iPads, a mobile hotspot and other devices. That could effectively be the same as killing multiple accounts without delivering additional revenue, particularly for devices that are bought and paid in full like the iPad rather than be being subsidized and thus under contract. On the other, if multiple devices are subsidized, carrier’s might recoup more over the long run.
There’s also the very real possibility of data overages in a scenario involving multiple family members that each have more than one device. Managing a pool of data across multiple users and multiple devices will be a lot more complicated than managing minutes or texts. That could be a significant revenue stream. However, that raises issues of carrier reputation and even potential regulation to curb shared data bill shock.
All this complexity and uncertainty explains why carriers have tried to avoid a shared data model. Even Verizon, which will be launching shared data options this summer, hasn’t said how the plans will function. Verizon’s effort, however it turns out, will at least lead to practical information about how consumers view shared data plans and how they impact carriers. That should embolden other carriers, particularly if Verizon’s experience offers useful lessons of what works and what doesn’t.Related