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12 | June 2008
Flat-fee is dead. Long live the fl at-fee
WiMAX operators will have to think innovatively about their fl at-fee offers if they
are to avoid data traffi c congestion. By Monica Paolini, Senza Fili Consulting
he clear trend in mobile Th is is due to multiple factors. Unlike more efficiently. For instance, a low-cost
data is towards fl at-fee cellular subscribers, most WiMAX sub- package may attract consumer users
unlimited plans. Asia- scribers use devices that encourage high who may not mind a slow network at
Pacifi c and North America data usage (eg, laptops versus phones) and peak hours, but want the service to be
have lead the way in 3G net- oft en view their subscription as an alter- affordable.
works and the rest of the world native to a primary DSL-like broadband Traffic caps are another way to con-
is following. Even unlimited, connection. Similarly to wireline opera- tain traffic, but they can negatively affect
fl at-fee voice plans have been tors, WiMAX operators are seeing high the perception of the service offering,
introduced in the market. levels of peer-to-peer traffi c and real-time even though they have no impact on
Monica Paolini
Subscribers like fl at-fee plans content streaming. most subscribers, as their usage levels
as they do not have to worry It may be tempting to wait until the are below the limits. As long as they are
about added fees at the end of the month. problem becomes more pressing, but some reasonable and only meant to prevent
Cellular operators are glad to see data of the leading operators have wisely started unfair network use, traffic caps can be
plans fi nally take up—although data-only thinking hard about the issue. Th ere are introduced successfully provided that
plans for laptops typically account for less diff erent approaches that can be used to the proposition is well articulated to
than 1 percent of mobile subscriptions, so address the dangers of fl at-fee unlim- subscribers. Traffic caps actually benefit
this is still a niche market. ited access without having to abruptly the majority of users to the detriment of
So what’s wrong with fl at-fee contracts? terminate it or imposing unacceptable few heavy users.
As long as few subscribers use a network, limitations, but operators have to tread More importantly, however, operators
capacity is not an issue and operators can carefully to avoid damaging their brand need to develop transparent, consistent,
aff ord to be generous. As usage grows, and subscriber experience. easy to understand charging model and
however, fl at-fee unlimited contract can Th e primary line of action is network allow them to monitor traffi c levels in a
quickly erode profi t margins. Increased management. For most fi xed and mobile straightforward way. Traditionally, this is
traffi c requires expensive infrastruc- broadband subscribers, traffi c is a best-ef- has been a challenge for cellular operators.
ture upgrades (a denser network of base fort deal: bandwidth and network resources Regardless of whether they are fl at-fee or
stations) and higher operating expenses are equally shared among subscribers and usage-based, the fi ne print on data plans
(more backhaul traffi c to carry, more base this means that for consumer subscribers from almost all operators is fi endishly dif-
stations to operate and maintain). the level of service is highly variable. fi cult to understand.
Even if costs are not an issue (and that’s WiMAX operators can use many Th is gives yet another opportunity
rarely the case), spectrum is a limited and tools to manage traffic more aggres- for WiMAX operators to gain ground
expensive resource. Even as 4G technolo- sively, using QoS, prioritised access, and over cellular operators as long as they
gies like WiMAX or LTE become more flow-based processing. This enables the are able to leverage both technology and
spectrally effi cient, physics still imposes operator to allocate network resources marketing tools to off er a more compel-
limits on the traffi c that can be transported based on who the subscribers are and ling service that takes into account the
within the available allocations. which applications they are using with- diff erent subscribers service requirements
While cost and spectrum constraints in the context of the overall traffic level in diff erent market segments. And it may
aff ect operators regardless of the technology in their coverage area. For instance, not be unlimited or have the same features
they use, WiMAX operators face tougher peer-to-peer applications will be able for everybody, but they can still call it
challenges in dealing with fl at-fee contracts. to use more bandwidth in the middle of fl at-fee.
In all cellular networks, voice makes up the the night, when traffic levels are low.
majority of traffi c and this keeps volume High-paying business subscribers, Monica Paolini is the founder and presi-
under control (there are just so many min- however, can have priority when they dent of Senza Fili Consulting and can be
utes per month individual subscribers are check their email during peak hour. contacted at monica.paolini@senzafi licon-
willing to spend on the phone). With data Active traffic management can improve Senza Fili Consulting provides
dominating in WiMAX networks, operators the perceived network performance and expert advisory services on wireless data
are already seeing high traffi c levels. allow operators to segment the market technologies and services.
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