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Will tiered pricing impede mobile video growth?

Verizon Wireless will eliminate unlimited data plans as it and other carriers look to gain control of growing bandwidth consumption and make consumers pay for what they use.

While data-heavy activities such as watching a video via a mobile device are still not commonplace among mobile users this may soon change. As faster 4G services become more widely available, the question is will these tiered plans affect media consumption?

?We?re still at the very early stages with 4G so it?s very hard to tell whether this will impede the growth,? said Noah Elkin, principal analyst at eMarketer, New York .

?At some point, 4G will be the norm and consumers will be paying more to get faster speeds and it will be easier to evaluate the overall growth,? he said.

Data hogs
Verizon Wireless said this week that it will replace its unlimited data plans with a tiered pricing structure that offers customers monthly plans ranging from $30 to $80 depending on their data usage. The pricing will affect new Verizon Wireless customers.

Similar moves were made in recent months by T-Mobile and AT&T, both of which dropped unlimited data plans in favor of a tiered pricing structure.

Verizon Wireless and other carriers are concerned about the quality of their network services as subscribers consume more bandwidth with smartphones and tablets. By eliminating access to unlimited data, the wireless carriers hope to curtail subscribers? data-hogging activities.

At the moment, however, use of mobile to engage with data-heavy media content is still limited.

?I?m doing some app research and have found that, despite the spike in bandwidth consumption, consumers are not involved in intense media consumption on the go but are browsing and occasionally downloading a video,? said Josh Martin, senior analyst for WMS at Strategy Analytics, Newton, MA.

And, what video consumption is taking place is often not going through wireless networks.

?I think if you look at some of the available data, it suggests that heavy mobile data consumption is taking place on WiFi, with consumers more likely to consume this content at home,? Mr. Elkin said.

Carriers concern may be more over what the impact will be on their networks as the volume of mobile video content grows.

?Some video series already exist and there will be more,? Mr. Elkin said. ?A lot of the concern from carriers is that these impending services are going to pummel the networks really hard.?

A stake in the ground
Tiered pricing is also a way for carriers to help consumers understand how much data they are using and getting them accustomed to paying for what they use.

The move will also help carriers drive more revenue out of the heaviest users.

?Carriers are trying to increase revenue among that are the heaviest users by having them pay more and having the rest of subscribers pay proportionately less,? Mr. Elkin said.

By eliminating unlimited data plans, carriers are also trying to underline the value of data.

However, it is possible that unlimited data plans will make a comeback as carriers start switching to faster 4G networks.

?We?re at a point in the market where carriers are learning about what unlimited data means for the network and their costs,? Mr. Martin said.

?It?s about putting a stake in the ground about the value of data. This increases the value for everybody by preventing abuse by a few,? he said.

?4g will launch and some companies may try again with unlimited data plans.?

Final Take
Chantal Tode, Assoc. Editor, Mobile Marketer