Hi all, I agree with this article 100%, there needs to be a better pricing structure for wireless Internet access! Take care, Jay

Wireless Plans and Pricing Have to Change

Wireless Plans and Pricing Have to Change

As consumers come to expect wireless access (either Wi-Fi or mobile network, or both), current pricing models are unlikely to remain unaffected. Though some consumers might not mind paying roughly $30 a month for connectivity to every mobile device, even when need is relatively light, but most will not find that a savory prospect.

That has lead to some thinking about "low-use" tariffs, and a bit of movement in that direction, but so far little widespread rethinking. That might not be quite so necessary if consumers embrace, and service providers aggressively promote, mobile hotspot devices and service plans.
There are two fundamental approaches: allow tethering of a smartphone with mobile hotspot features, or use a purpose- built device providing the mobile hotspot functionality.

There are, of course, key revenue implications for service providers. At a high level, service providers have to figure out the best strategy to maximize revenue from many sorts of devices, some of which use relatively large amounts of bandwidth, others which use small amounts; some devices used every day and others that are used only sporadically.

Mobile hotspots act as connectivity multipliers, extending a single network connection to multiple devices, rather than forcing consumers to buy separate mobile subscriptions for every device.

About two thirds of buyers of still cameras, MP3 players, personal navigation devices and e-readers, on average, view connectivity as an important product feature when making their purchase decision, says Christopher Collins, Yankee Group analyst.

Consumers benefit because Wi-Fi devices can be used without incurring incremental access fees, in many cases.

On the other hand, there arguably are some ways mobile hotspot connectivity can provide benefit service providers as well, in part by easing device certification requirements. Wi-Fi-only devices can be introduced faster, in part because testing designed to ensure that the devices work on multiple networks (2.5 G, 3G and 4G networks, across cell tower locations, for example) is lessened.

Wi-Fi-only devices also mean that devices can be sold without regard to which air interface or which service provider decides to support it. Wi-Fi-only iPads can be used on the Sprint, Verizon (News - Alert) and T-Mobile networks, for example.

Also, Wi-Fi offload is likely to grow as an important way of distributing access load more evenly between wireless and fixed networks.

Of course, there are strategic issues. As much as wireless service providers might like to sell a $30-a-month access connection for every mobile device, consumers are unlikely to agree. That suggests there will be lots of experimentation before viable and widely-accepted models are created.

The Palm Pre Plus (available in the U.S. on the Verizon network), the Sierra Wireless (News - Alert) Overdrive (on the Sprint network) and the HTC EVO (also on Sprint, available sometime later this year) currently or soon will provide dual wide-area Wi-Fi and 3G or 4G network connectivity. Presumably the coming HTC "Evo," running on the Sprint (News - Alert) network, also will have this functionality.

In essence, a mobile hotspot is a way of providing 3G or 4G bandwidth for a variety of Wi-Fi devices while paying for just a single connection. That summarizes both the consumer value proposition and the reason mobile network providers have to think about the capability.

Mobile hotspots can enable wide-area connectivity to devices that would otherwise be restricted to Wi-Fi local-area environments. Second, mobile hotspots can save consumers money by aggregating the cost of network access for multiple devices.

Cradlepoint and Huawei (News - Alert) announced their "Clear Spot" and "i-Mo" hotspot solutions in early 2009; Verizon Wireless and Sprint have been supporting MiFi solutions from Novatel Wireless since May 2009; and Vodafone (News - Alert) followed with its own Novatel Wireless product in October 2009.

Verizonís Pre Plus and Pixi Plus are, at first glance, no different than the Pre and Pixi devices Palm launched last year with Sprint. Under the hood, however, the newest Palm smartphones offer a completely new functionality: an embedded mobile hotspot router that allows users to connect up to five Wi-Fi-enabled devices without any additional hardware.

More important than Verizonís marketing of the device, however, is the pricing. In early April 2010, Verizon slashed the price of both devices (to $49.99 for the Pre Plus and $29.99 for the Pixi Plus, both with two-year contracts) and the mobile hotspot service (to $0 a month).

That means a user who typically uses both a PC dongle and a smartphone could economize by using only a single smartphone plan, then use additional Wi-Fi-only devices for no incremental charge as well.

Mobile hotspot solutions possibly can boost top-line revenue by providing a sticky solution resistant to traditional customer churn. Sprint might be a chief beneficiary if other operators do not match the Evo packaging.

But some other providers might find they face a bit of erosion as well, as when a user drops a PC dongle service and uses a smartphone with hotspot capability instead.

The point is that consumer wireless service plans are going to be changing, in part because users now have a growing mix of devices to support, and a flat $30 a month fee does not make sense for all of them.

But mobile operators have encountered similar problems before, and created "family plans" as a way of convincing users to add more devices and usage to an existing account. Something similar likely will happen as users decide they want to support more devices on their accounts.