Contrary to widely-held perception, the vast majority–99%– of smart phone users would be better off with a pay-for-usage plan like AT&T’s new data pricing model as opposed to one based on a flat-rate and unlimited usage, according to analysis of 60,000 mobile customers’ phone bills conducted by the Nielsen Company for its Customer Value Metrics product. There are other opinions, particularly from consumer groups, who disagree with Nielsen’s conclusions on pay-for-usage plans.
“When we look at smartphone data consumption distribution and year-over-year change, we see a large disparity of usage among smartphone users and are struck by the staggering amounts of data used by the heaviest users,” writes Roger Entner, SVP of Research & Insights in Nielsen’s Telecom Practice, on the Nielsenwire blog.
With smartphone sales growing so smartly–penetration is now at 23% in the US according to Nielsen’s research–average data consumption has shot up some 230% year-to-year between Q1 ’09 and Q1 ’10, from 90MB per month to 298MB per month.
But while the number of smart phone users using less than 1MB of data per month dropped from more than 1/3 to 1/4 during this period, that still means that some 20 million smartphone users are hardly using data. Moreover, the top 6% of smartphone users consume half of all data, Entner notes.
What does this mean for service providers? Entner draws three conclusions:
As mentioned earlier, the vast majority of customers are better off with a pay-for-usage as opposed to a flat-rate payment plan;
Service providers need to educate smartphone users. “For some reason these customers have purchased a miracle in engineering and technology that has more computing power than what was used to get men safely to the moon and back and yet they only use their smartphone for phone calls and text messaging,” Entner elaborates. “Operators have to do a much better job in conveying the value and utility of these powerful devices–and to marrying the right device to the right customer.”
More than 1/3 of smartphone users have not signed up for a data plan. It’s critical that service providers provide and convey value to them as well as getting them to sign up for data plans and collecting revenue from them.
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