O2’s Chief Executive Ronan Dunne explains why unlimited is a thing of the past.
When the mobile industry first heard the word “smartphone”, few of us realised how smart these devices would eventually turn out to be. Today, though, their extraordinary power is visible to anyone. They have literally changed our world, in ways that the first smartphone creators could barely have imagined; they entertain, help us navigate around unfamiliar cities or countries and keep us in touch with each other in myriad ways. For tens of millions of people around the world, it’s hard to imagine life without one.
To make all this happen, of course, we need data. And that in turn means that we are becoming increasingly reliant on data networks that were originally conceived with far dumber devices in mind. Thanks largely to smartphones, those networks are under greater pressure every day – one streamed YouTube video has the same effect on the network as half a million text messages sent simultaneously, the equivalent of everybody in Newcastle sending a text at once.
This extraordinary growth in the smartphone phenomenon is gratifying for the industry to watch, but it inevitably comes at a price. At O2, we’re seeing a doubling of data traffic on our networks every four months, and we are far from the only operator worldwide seeing growth of this kind of magnitude. At the same time, though, the way that we charge for this data is pegged to an old flat-fee, all-you-can-eat model designed for a far less data-hungry audience. So while data consumption is growing at enormous rates, our revenues are largely flat – a far from ideal situation for any business, least of all one growing as fast as ours.
As an industry, we’re doing an excellent job of coping with the increased demand. O2 alone invests £1 million every day in its networks as part of our effort to ensure that customers continue to get great performance from their mobile devices. At the same time, though, we’ve been working to hard to understand exactly how customers use data, so that we can predict and manage demand more efficiently. The results of those investigations have revealed some extraordinary facts. Nearly a third of our data traffic is accounted for by just 0.1% of our customer base, for example; a stark imbalance by any conceivable measure, and one which often affects network performance for the rest of our customers.
We don’t think it’s fair that the many should subsidise the behaviour of the few, and we think that we have a responsility to our customers to address this kind of imbalance. So from June, O2 will pioneer a simple but important change to our billing structure, in which we will begin to ask our heaviest data users to pay more for using large amounts of data. The vast majority of our users will be completely unaffected by the changes – 97% of our smartphone customers currently use less than 500MB of data every month.
This change may be a simple one, but it is a revolutionary one too. For most of our customers, the only noticeable difference will be a positive one; we’ll invest more money in more network capacity, with the result that their experience will be smoother. But at the same time, we’ll start to change customer perceptions about the value of the data they use; a vital part of ensuring that people share it responsibly and considerately.
At O2, we believe that in the future, mobile data will be every bit as important as the other commodities that we take for granted – water, electricity, TV signals. It will form an important part of the basis for a new digital future, in which all citizens have access to the information and services they need to run their lives. But we also believe that unless we find a way to manage it more effectively, the provision of mobile data will become uneconomic for the world’s operators and risk holding back the digital economy of the future. Our new billing strategy is an important stepping stone to that future – a means to ensure that however it evolves, everyone has fair, transparent access to the mobile data they need.