Offering fair and transparent access to mobile data

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.

Comments

[Huss]

You havent answered Paul's question !

"Is there any way O2 can give us a report on average monthly usage up to now? "

[moz]

Thak you o2 for that answer. would the unlimited data still be included in the early upgrade.

i mean i pay small fee as you state. but don't want to change the tariff would that be possible

[CJ]

The 500mb allowance will (according to your own figures) allow you to listen to 12 songs per month.

I think if you showed us the actual distribution of data usage you would find that the bottom 80% of users do not actually use the internet at all. They will look up a map once or twice and possibly get some Facebook updates and that is it.

The remaining 20% of users will actually surf the web, make voip calls, video calls, stream audio/video etc. Of this 20% the top portion will obviously be just doing more that leads to these skewed figures you are using.

Since none of these 'unlimited' packages are actually unlimited at all, you are within your rights to cap them on their fair use contractual obligations, however by doing so you would not only loose out on their custom, but also the ability to charge the 1000s of ordinary people that accidentally go over their 'limit' and get charged

[O2]

Mark: You're right, we believe the 97% won't be affected by the change. You don't need to worry about your data use though - we'll text you to keep you up to date on how much data you're using. You can also rest assured you won't be charged any extra without realising it - even if you do hit your limit all that will happen is your data access will slow down. You won't be charged any further without calling us.

Louis: We do have an excessive usage policy and that will be enforced - on the new tariffs you will not be able to go above your limit without paying extra for more data access.

Huss: You can see your data usage on your monthly bill or on our site if you're set up for online billing.

Moz: If you didn't want to change your tariff then you don't have to!

[O2]

CJ: You won't be charged for going over the limit. Once you reach your limit your data access speed will slow down - at this point you can either call us up to add more data or wait until the next month when your allowance is reset. There are no hidden charges for going over your data allowance although we will text you to let you know how much data you've used.

[Steeeve]

You said that by treating everyone the same you are being fair and transparent.

You also say that only customers on new contracts will be affected and current customers can keep their unlimited data.

Surely this means:

(1) you are not treating EVERYONE the same, you are punishing every NEW customer

(2) the 3% of customers you allege are using more than their fair share of data are EXISTING customers, who will carry on using loads of bandwidth as before.

How does any of this solve the network congestion?

[David]

And amongst the data pricing increases I see O2 have slipped in yet another increase to the actual length of the contracts – they are now quoting 24 months, up from my existing 18 months. Grossly unfair frankly.....but do they care!!!!! All in all, I’m really seriously re-thinking my plans to upgrade to a 4G iPhone if they continue to try and price their customers out of the market. So 3% of their smartphone customers will be generating enough extra revenue to fund millions of pounds worth of network upgrades? Really?

[Gary]

Its nice that they are responding to most of the questions.

What I want o2 to answer is this: Why market all your smart phones, like the Desire, like the iPhone as being these incredible devices that can do all those wonderful things like view videos, play music, do your GPS and check all your emails and Facebook etc yet then turn round and say but you can only use 500MB.

It just doesnt make sense and is against the logic of what a Smart Phone is actually intended for.

[O2]

Steeeve: The new data tiers will apply to new and upgrading customers. That means if you're an existing customer of O2 who upgrades to a new handset you'll be part of the new tiered data system. We don' want to 'punish' anyone - the lowest tier is still double what most customers use.

Existing customers who don't upgrade can still keep unlimited data, you're right, however there is an excessive usage policy in place for these customers.

[chris]

Hi, its not clear to me if the 97% is really iphone users, or all smartphones. Its not clear if your average is the median or an arithmetic mean - the latter will be skewed by one or two big users. I imagine iphone users use much more data than any other kind of smartphone, and think you should have separate tariffs for them. Please keep the data free at the point of delivery - a fixed price tariff means we can plan ahead in a rime of austerity

[O2]

Gary: You're right, smartphones do amazing things that phones five years ago couldn't dream of doing. Even most customers using these amazing phones are using less than 500MB of data though so we don't believe it's against the logic of what they do.

Having said that if you do want more than 500MB then we do have tariffs that offer more - some tariffs offer up to 1GB - and you can also buy extra data in the form of Bolt Ons if you like.

Finally don't forget that our smartphone tariffs give you Wi-Fi access at thousands of BT Openzone and The Cloud hotspots throughout the UK too.

[O2]

Chris: You'll still be able to plan ahead - if you use your data up you won't automatically be charged, your data access will just slow down. You can pay for more data if you like in the form of Bolt Ons but it's not essential and you won't be charged any extra if you don't.

[O2]

David: The tariff on display on our press release is just one of the tariffs iPhone will be available on. To view them all go to http://www.j.mp/iPhoneOnO2 and yes, there are still 18 month tariffs.

[David Johnson]

Why are you forcing existing customers who want to upgrade their phone to give up their existing tariff. This is unequal treatment of existing customers as those who have the current generation handsets may be happy to stick with their existing phone and keep the more generous tariff; whereas those like me on older phones will be forced to forgo their tariff if they want a more responsive phone. Wouldn't it be fairer to both classes of your existing customers to apply the new tariff to new customers only and let all existing customers keep their existing tariffs? I believe this is what your US counterparts have done - grandfathering the existing tariff for existing customers.

[O2]

Hi David
Thanks for the comments. If you've got an existing tariff then you're welcome to keep that for as long as you want. When you come to upgrade your phone though you'd need to move to a new tariff and go on the new tiered data - it's fairer to apply this to everyone as opposed to just customers who are new to O2.

[Heather]

I'd still like to know if O2 can show unlimited customers how much they are using on their bill so they can make the choice whether or not to upgrade. Paul asked that question earlier and you didn't answer it. I asked it again in a different comment which was never posted. Frankly, if I don't have that information when it comes time for me to upgrade, I'll probably switch to a different network/smart phone that will give me an unlimited tariff. This blog has transparent in its title, but how is it transparent if unlimited customer can't see what they are using presently before they upgrade?

Thank you?

[O2]

Hi Heather
You can check your data usage on your bill or on our website if you're set up for online billing.