Nightmare on Mobile Data Street... again....

So here it is again, someone buys a phone, uses it as a modem then gets and outrageous bill (surprisingly not for roaming aborad). This time an oil field worker in Canada used it to download movies and was only warned when he recieved the $60,000 bill. When he called up they cheerfully informed him it was now up to $85,000 since the bill was printed. These stories seem to pop up all the time and suggest that there is a strong element of unreality in the current billing models.

The challenge of pricing mobile data for the Mobile Network Operator is that it must

1. Reflect the cost of operation of the service (i.e. the variable costs of the backhaul of the cells to the core network),
2. Includes a normal profit level and (enough to cover the write off this year against the 3G license) and
3. Allows useage that doesn't cripple current network (Voice, SMS & MMS) and destroy the whole user experience that they are marketing agressively.

All the above have to be done with your eyes closed as you will not know what your customers are going to do on your network till they do it. The consumers often will do some predictable things like the surfing the internet and downloading music every now and again someone devices a new use and its these that are often the problems.

The pricing models are not often aligned to what some people will want to do such as downloading high definition movies or as an enterprise customer deploying a heavyweight application to a large population of their users.

A recent example was that there were major network problems with a certain MNO in the financial district when one customer deployed a heavy weight application and started bringing down the cell because all their users were in that one cell.

Its a challenge that will continue to evolve and everytime there is a network device speed upgrade then the challenge begins again. As our mobile devices become capable of doing much more, people will do much more. A clear example of this is the increase in the definition of the cameras on these phones. We suddenly have the ability to generate heavy weight content on these small format devices.

As high speed networks become more mature the ability to predict network traffic will improve and modelling of the data usage is easier. The challege is keeping ahead of the curve in terms of consumer & enterprise usage and matching this to the investment program that will increase the capacity.

Its key that the MNOs get this right as any artificial pricing caps put on usage will damage the development of web 2.0 and the exciting deployment of applications and content for users. If we are scared of the price, we'll find a different way to do something.... (iphone and WiFi hotspots for example).

However all this is just about the domestic consumption of Mobile Data, so roaming is just another level of complexity and cost.