Hot on the heels of AT&T (see my previous post), O2 is the second to confirm Pyramid Research’s assessment that operators will move away from the unlimited pricing model because it’s not sustainable in the long term.
UK operator O2 announced that it would put an end to its unlimited data plans. Beginning on June 24, O2 will offer new customers a choice of six plans that bundle from 500MB to 1GB of data with a voice plan for £25 to £60 (US$37.04-$88.90). Unlimited data will be available for new and upgrading customers until October 1 as a promotion, while existing O2 customers will be able to keep their unlimited data plans until the end of their contracts, subject to fair usage policy.
The new pricing strategy was announced just days before the launch of the iPhone 4. That supports our view that operators have to modify pricing to monetize data traffic generated by the arrival of new hot devices and the introduction of bandwidth-rich applications.
Precise data traffic management is key to limiting customers’ complaints related to network congestion and dropped calls
Pricing strategy is critical to close the gap between increasing data traffic and data revenues that do not follow
O2 estimates that 97% of its smartphone customers currently use less than 500MB of data per month. Therefore the decision to drop unlimited data plans will affect only 3% of O2 customers today, while in the future it will enable O2 to benefit from their customers' growing appetite for mobile data.
Pyramid Points
