Communications service providers must adopt multi-device data plans to expand connectivity

Telecom Lead America: Multidevice data rate plans will
be a key driving factor in the expansion of U.S. data revenue from $81.4
billion in 2011 to $151.9 billion in 2016.

This is in line with the growing demand from consumers and
small businesses in the U.S. in response to the growing number of devices with
cellular modems, according to Gartner.

“Data rate plan uptake in the U.S has grown
dramatically in the past seven years due to the runaway success of the
smartphone market and has become a key revenue source for U.S.-based
communications service providers (CSPs),” said Hugues de la Vergne,
principal research analyst at Gartner.

“Historically, CSPs have strictly been focused on
individual data plans,” de la Vergne added. Now the U.S. data plan
market is set to begin its first real transformation, with data plans poised to
evolve from plans tied to an individual device to plans that share a specified
amount of data between multiple devices.”

CSPs should adopt these multidevice plans to take
advantage of the dramatic expansion of cellular connectivity that connected
consumer electronics (CE) devices offer, or they will find themselves at a
considerable competitive disadvantage compared with other CSPs.

“With personal cloud services moving to the forefront
in 2012, cellular connectivity will be more important, as end users will want
to be able to access their content at all times as opposed to just when they
are in Wi-Fi areas,” de la Vergne said.

 Lowering churn is one of the most critical metrics for
a CSP.  By having multiple devices with different replacement cycles tied
to a CSP’s network, the end user is less likely to churn away from that CSP as
opposed to a subscriber with just a mobile phone. 

Device producers should embed cellular connectivity into
more CE devices to obtain higher margins, or try to obtain CSP subsidies and
use seamless integration between devices as a competitive differentiator.

The launch of multidevice data plans by CSPs will be a key
cause of the increase in sales of cellular-enabled devices, including
smartphones, which Gartner estimates will reach 311.7 million units in
2016. Device vendors, which have had a growing threat of commoditization,
need to continue to innovate to avoid the high level of competition that has
engulfed the market.   

“Although billing system customization will be
expensive and CSPs’ current data revenue streams could decline, the risks of
not offering multidevice plans, and therefore being at a competitive
disadvantage, are too great,” de la Vergne said.

“Data revenue is expected to expand to become 65
percent of total U.S. wireless service revenue as voice declines to 35
percent in 2106. Driving the explosion of mobile data will be the increase in
demand for mobile video content, which will drive sales of larger-screen
devices, such as media tablets,” de la Vergne added.

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