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European Mobile Broadband Providers Admit Usage Caps Designed to Deter Usage, Investment In Networks Anti-Profit

Phillip Dampier October 5, 2009 Data Caps, Wireless Broadband 1 Comment

dongleFrom the Department of Duh:

The plight of mobile providers to strike profit riches in mobile broadband has been stymied by the fact customers actually want to use the service they pay for each month.

Even worse, customers are using dongles to give their laptops and netbooks wireless connectivity, which hurts an industry accustomed to charging top dollar for data plans used sparingly on cumbersome mobile phones.

“Dongles really are reaching a critical mass,” a Vodafone spokesperson told BBC News.

French operator SFR claims laptops equipped with a dongle use 450 times more bandwidth than a classic mobile phone.

So-called “smartphones,” which often include a built-in or on-screen keyboards, are using lots of data, too.

The result has been near-universal adoption of usage caps in European mobile broadband, which UK operator O2 admitted earlier this year were “used as a deterrent and to make sure that others using the network had a good experience.”

Many providers have customers too afraid to exceed those caps, often set at 1-5GB per month.  The punitive overlimit fee can easily add tens of Euros to mobile broadband bills.  Many customers stay well clear of the cap to avoid the prospect of receiving a shocking bill.

Providers fear their mobile networks may soon be at capacity.  That would logically lead many to presume fast and furious investments in their networks to upgrade capacity, but that is exactly the opposite view some providers have.

“You can easily lose money on mobile broadband if you do it in the wrong way,” warns Bjorn Amundsen, director of mobile network coverage at Telenor in Norway.

“We have had to be careful not to invest too much, because the only thing that would happen if we did would be to increase data traffic without an increase in our profits,” said Amundsen.

Phil Sayer, principal analyst at Forrester Research told the BBC, “the user community as a whole is tired of hearing special pleading from the mobile operators.”

“Remember, these guys have been making money hand over fist from data roaming charges,” Sayer said.

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Tim
Tim
14 years ago

“Providers fear their mobile networks may soon be at capacity. That would logically lead many to presume fast and furious investments in their networks to upgrade capacity, but that is exactly the opposite view some providers have.” People keep saying that I am crazy when I say stuff like this if caps were implemented: 1. Providers will fit as many on one pipe as possible. 2. They will not upgrade their networks. 3. They will implement even more draconian type caps to stem usage and to delay upgrading their system even further. But that is how these providers think. They… Read more »

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