Flat-Rate Plans Could Spur Mobile Growth

The move toward flat-rate, unlimited calling plans by three of the major U.S. wireless carriers this week could help spur the growth of mobile media and advertising, say industry analysts and mobile marketing executives.

They view the unlimited $100 voice plans announced in succession by Verizon Wireless, AT&T and T-Mobile as fostering greater usage, and as a step toward all-you-can-eat offers that will eventually include data services. That would help turn the cell phone into a more ad-friendly platform as more people download content, send text messages and surf the mobile Web.

Currently, only about 14% of U.S. mobile subscribers have data plans, according to December data from mobile market researcher M:Metrics. Content providers and marketers have generally been frustrated with slower-than-expected growth of mobile media.

"I think it's the beginning of game-changing," said Eswar Priyadarshan, CTO of Quattro Wireless, which operates a mobile ad network built around 60 large, branded sites as well as the newer GetMobile self-service ad platform. "(Carriers) are already bundling text into unlimited plans and it seems that they will drop in data as well."



Some observers are already predicting that the new flat-rate plans signal the start of a price war among the major carriers that could push rates even lower as voice traffic becomes increasingly commoditized. Sprint--whose CEO Dan Hesse touched off the rapid-fire round of carrier pricing moves by telling USA Today the company may introduce an unlimited, flat-rate plan--could try to undercut the new $100 plans.

"I think this will motivate some number of people who don't already have them to get data plans, and bring the overall cost of mobile plans down," said Greg Sterling, senior analyst for Local Mobile Search, a unit of Opus Research. He added that the unlimited voice plans would also encourage more people to forgo their land lines in favor of cell phones instead of paying for both. The savings could be used to add a data plan.

The new offers aren't necessarily restricted to voice minutes. T-Mobile has already upped the ante a bit by including unlimited text and instant messaging in its new $100 voice plan. Verizon, meanwhile, offers an all-in-one unlimited package covering voice, messaging, its V CAST data service, VZ Navigator GPS service, and mobile email for $140 a month.

That's a good step, said Priyadarshan, but still too pricey to sweep in a much broader base of data customers.

He pointed to smaller carriers such as Cricket, MetroPCS and Leap Wireless that already offer voice and data packages for $30 to $50. Their larger rivals might charge just as much for data services, he said. These regional operators, however, don't have the same national coverage as major carriers, and the plans don't include unlimited roaming.

Even so, their share of mobile Web browsing traffic on Quattro's network of sites is higher than the overall subscriber market, Priyadarshan said. "We see great results in user behavior in terms of mobile surfing and click-throughs. It's a vibrant mobile media and advertising environment among these folks," he said.

At the high-end, the iPhone's $60 unlimited monthly plan via AT&T has played a part in its success in opening up the mobile Web. AT&T says 95% of iPhone users surf the mobile Web, and Google recently disclosed that iPhone owners were making 50 times more searches than users of other mobile devices.

James Colby, vice president and CMO of Comverse Americas, a unit of telecom software and services provider Comverse, agreed it would take combined voice and data plans under $100 to really kick the mobile media into high gear. "If you take away the price constraints then you could see massive growth in traffic," he said. "If it's truly all-you-can-eat, then the era of the mobile Internet is upon us overnight."

As it is, he doesn't see the unlimited voice plans shaking things up much when wireless calling plans in North America already offer 1,000 minutes for $40 or 1,000 minutes for $100. "Maybe it's just a bit of marketing and hype rather than something that will impact the market," he said.

Still, the potential for upselling is there, noted William Ho, a wireless analyst at high-tech market research firm Current Analysis. He cited a securities filing by Verizon Thursday that indicated only 0.5% of its customer base currently have wireless plans for over $100 a month. "Given that, the upsell opportunity is probably greater than the cannibalization of higher-priced plan users," he said.

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