Mobile Start-Ups: Don't Expect Flat Data Rates on Mobiles to Drop Quickly

There's a flawed argument I keep hearing from start-ups focused on the mobile space. The argument is that we are very close to seeing data rates drop significantly and will experience extensive implementation of "all-you-can-eat", affordable data tariffs. I don't buy it! Why? Because there is no reason for the carriers to rush out and do this. Right now, they can continue to milk the suckers (myself included) willing to pay €89 plus all roaming costs outside of Germany for an XL iPhone tariff. My average bill is rarely below €200 a month. Factor in that each carrier is still able to earn billions on SMS fees and you can clearly see that they aren't going to move forward unless absolutely forced. They also aren't going to be quick to implement data intensive services. The herd that we are as customers, we would then all move to these services, hence needing all-you-can-eat flat rates. If we as a group start demanding them at the prices we are willing to pay, the carriers are forced to decrease the cost of these flat rates. This was the case with pre-paid plans and the reason Simyo, Blau and co. ended up being successful. How far do I see the market away from affordable, all-you-can-eat data plans for the masses? Best case, it's at least two years away. Base-case is for me about three to four years. In a worst case scenerio we won't see this really moving forward until at least 2014. If you are a start-up in the mobile space and are dependant on flat data rates, you better factor this into your cash planning.  

Comments

[Vitor Domingos]

Well, I have to agree with you. I has expecting that the iPhone plans would be more generous in Europe, like they were in US, but no, operators not only milk everything out, but they drain it until exhaustion. So, not only iphone didn't driven mobile flat-rates, but there was an huge increment on datacards to overtake the fixed ISP.

Oh! and the roaming data plans are pornographic! Take Vodafone for instance. It's the same network, but with huge price differences!