A 4G iPad Requires A Sensible Shared Data Plan

from the cellular-operators-losing-the-battle-for-connected-devices dept

The Apple rumor mill is spinning at full speed again, with word of a new iPad release in March. This would be on schedule for Apple, so the real speculation is around exactly what improvements this iPad will feature. The Wall Street Journal, normally not the town gossip, wrote that the upcoming iPad would feature a smaller 8-inch screen, and would be LTE-enabled. LTE is the latest, fastest network technology available from Verizon, AT&T, and other network operators. But the intention here is not to pile on to the speculation of what Apple might deliver. The intention is to speculate instead as to what the carriers might have up their sleeves with respect to an LTE tablet pricing plan.

When the LTE iPad hits the market, expect to see it sold with a "shared data plan", or a plan that is connected to a smartphone plan, and share a common pool of MB of traffic per month. Verizon, in particular, has hinted that just such plans will be emerging soon. Lowell McAdam said in December that such plans would emerge "sometime in 2012" to accommodate the increasing number of people with multiple mobile Internet devices. Such devices include smartphones, laptops, tablets, and others. More and more, subscribers are adding devices, and are getting frustrated at having to open a separate account, with a ~$50/month price, just because they choose to browse on their tablet instead of their smartphone. Most customers, rightly, assume that it should make little difference to the operator whether they access the net on their tablet, laptop, or phone. This is just a substitution of the access device. Because of the current punitive billing, owners of multiple connected devices are defecting from the cellular game, and instead opting to use Wi-Fi only on laptops and tablets...and liking it!

Research from The NPD Group has shown how the attach rates (portion that sign on to cellular service) for cellular-ready tablets have been less than stellar, and decreasing over time. In April 2011, NPD says that 60% of tablets only connected via Wi-Fi, but by December 2011, that number had jumped to 65%, showing how Wi-Fi has been winning out over the more expensive and contract-laden cellular offerings. Tablets like the Kindle Fire are sold as Wi-Fi only, contrasting with the earliest Kindles which all had cellular radios embedded. The carriers are at extreme jeopardy of losing the connected device market (and embedded market and M2M) simply because they have lagged in offering the kinds of flexible plans that make sense.

Once a trend away from cellular connection takes hold, it becomes harder to stop. Wi-Fi networks will respond with increased capacity and increased hotspots, OEMs will respond with more Wi-Fi-only devices, and consumer behavior will respond by considering tablets as "portable" Wi-Fi devices, not fully mobile like smartphones. The strategic cost to the carriers is significant. While the trend won't be stopped, it is certain that carriers could retain significance by offering pooled data plans at sensible bundled prices. This means selling data to a consumer, not to a consumers specific device. And what better way to launch such a new pricing plan than with a device that the market has proven to love - a new iPad?

So whatever the shape of the new iPad, and the fantastic new features that fanbois laud while naysayers explain how they were just repurposed from other devices, we should fully expect an LTE iPad with a new kind of cellular pricing model, which drives up the attach rate, increases device utility at a reasonable price, and creates greater carrier loyalty and long-term gains. If Verizon and AT&T do this right, we could all win.

Filed Under: 4g, data plans, ipad, wireless
Companies: apple, verizon

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  1. icon
    Jim O (profile), 17 Feb 2012 @ 5:02am

    Killer App for Wi-Fi

    I've always thought it'd be awesome for some company (Google?) to make a WiFi router that makes it easy to share. Most people are afraid to leave their routers unlocked for fear of nefarious activity.

    Imagine if NYC had a million 802.11 routers that each let devices automatically log on as they passed by. There would be some security risks, sure... but it'd be a free distributed alternative to a cellular network.

    There could be a bunch of different business models associated with it. The network could be free to access so long as a user is running a node. The network could be pay for access with some of the money going to "node" owners.

    I'd ditch my data plan if this became popular. Hell... the cell companies were just griping that they can't keep up with demand. They should love it too.

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