With competition between the Big Four carriers in the United States reaching a fever pitch, the ensuing price wars could have a significant impact on mobile marketing.

Competition is driving the current price wars and is being stimulated further by the fact that U.S. consumers are showing an appetite for mobile data like never before. U.S. carriers have seen messaging volumes move off the charts over the last three years and there is a strong sense that broader mobile data use is on the cusp of similar growth.

?Through the iPhone and other smartphone devices, carriers have seen the potential for growth of data use and content services when the user experience is compelling and when users do not worry about bill shock,? said Nitesh Patel, senior analyst of global wireless practice at Strategy Analytics, Milton Keynes, England.

?Therefore, carriers are moving to reduce the pricing barriers for mobile data use in order to capture this growth opportunity,? he said. ?They are also trying to ensure they offer a compelling range of devices.?

Historically there has been little differentiation between the U.S. carriers and their data pricing, and there continues to be little real differentiation in both the pricing model and the levels, according to Strategy Analytics.

Pricing details
Carriers have typically segmented their data plans based on the device type, with $15 per month the average for low-end and feature phones, and separate plans for smartphones at around $30 per month.

?What we are seeing is data pricing for feature and low-end handsets fall to around $10 per month, and also the requirement for smartphones to have data plans, for example T-Mobile USA and Verizon Wireless,? Mr. Patel said.

Verizon Wireless has revamped its mobile data pricing and is charging $2 per megabyte. It has introduced $9 pricing for 25 MB bundles for feature phones and low-end devices, and $30 for unlimited data across all handset types.

Similarly, T-Mobile charges $10 for mobile data access on low-end and feature phones and $30 per month for smartphones.

AT&T has yet to alter its pricing for low-end and feature phones and has yet to make data plans a requirement, with the exception of the iPhone.

AT&T charges $2 per MB for pay-as-you-go mobile data, while its unlimited mobile Web browsing for low-end and feature phones is $15 per month. For smartphones, AT&T charges $30 per month.
 
Is mobile marketing a priority?
If revenues from subscriptions decline, then the carriers will have to pursue alternative revenue streams to a greater degree.

Does that mean carriers will make mobile marketing, advertising, content and commerce more of a priority over the course of 2010?

?Operators most certainly do need to look towards other avenues for revenue growth,? Mr. Patel said. ?Low data traffic charges will drive penetration and total data revenue for carriers, but competition will soon erode that growth, as we are seeing in Europe with the plateau of SMS-related revenue.

?Operators have a billing engine which they can exploit, but also hold valuable subscriber data such as device type, content preferences, user location, etcetera, which on paper could be used to gain a position in mobile marketing,? he said.

Privacy legislation may prevent exploitation of customer data, but carriers are certainly going to evaluate this play.

Assuming that the carriers have the desire and are able to open up more subscriber data to marketers, how much can they charge?

?There's also uncertainty about how much the data they can offer for targeting is worth to advertisers, and whether operators can make it available at attractive enough rates,? Mr. Patel said.

?We've already seen with location-based services that carriers have over-charged for location APIs and consequently stifled market growth for LBS,? he said.

More eyeballs a good thing
Even though carriers? subscription rates are currently trending downward, there is no guarantee that trend will last. If it does, it could lure more consumers to postpaid plans.

?Clearly with a price reduction, assuming that price reduction can hold for a period of time, that could potentially draw more people into getting mobile service with the national players,? said Michael Becker, Global and North American Board Member of the MMA and cofounder/vice president of strategy at iLoop Mobile, San Jose, CA.

?The question I have, it doesn?t seem that price reductions are uniform across all plans,? he said.

Carriers? recent pricing reductions have been focused on family plans and unlimited voice and messaging plans.

The price reductions largely have not affected those consumers with monthly minute plans or smartphone data rate plans.

?Price reductions aren?t happening there,? Mr. Becker said. ?It appears to me this is a mechanism of reducing the cost of ownership for the use of mobile services for the higher-end market user or family user, the heavy voice traffic users or a family that has multiple phones.

?It has the potential to get people onto unlimited plans and therefore open the door for them to be more interested in the ability to text message,? he said. ?For mobile marketing, text messaging is the most ubiquitous and has the farthest reach in terms of engagement, so this could be very good for mobile marketing.

?More people could embrace unlimited plans and not be concerned about metered charges to participate in mobile markeitng initiatives?the more people can alleviate that concern, the more people will be interested in and active in mobile marketing programs.?

As more and more people engage in using their mobile data services, there will be more opportunities for brands and marketers to use those channels to engage consumers, as long as they offer those consumers a value proposition to participate.

?Brands could be more willing to spend on mobile marketing initiatives if they?re not as concerned about a consumer bearing the costs to participate in a campaign,? Mr. Becker said. ?As pricing models mature, if and when these price reductions enter into realm of data, it could potentially drive more mobile Internet usage and multimedia messaging usage.

?How might that influence or affect mobile marketing practices?? he said. ?You have to look at individual channels that are affected, and as those prices are reduced, it will make it easier for consumers to adopt those channels.?