So, would you like to name your own price for high-speed Internet access? It may sound a bit far-fetched, but it may be on its way – imagine William Shatner over your shoulder telling you to demand $1 for unlimited 4G wireless for the day. Don’t think it can happen? Well, let’s take a look at the competitive environment for your wireless bucks.
Competition is the engine that ignites innovation. One product emerges, such as the iPhone, and sets the standard by which all other products are measured. This type of competition drives to differentiate a product in order to break away from commoditization to gain market share without having to engage in cut-throat pricing.
Consumers and business benefit from this type of competition, getting higher performance and more features from a larger number of companies. However, there is another type of competition that also benefits consumers and business alike. Essentially based on the commoditization of a product or service, price competition, driven by consumer selection increases the value received by enabling the consumer choices in the selection of a lower cost item or service.
So, what does this have to do with telecommunications? The general observation is that communications equipment has commodity items and competition that has driven down the cost of routers, switches, and optical transport equipment. For service providers, it has also dramatically lowered the cost of Internet services. This includes both wired and wireless.
For this article, let us focus on Internet services. Anyone with experience in purchasing wired Internet service knows that much of the cost is driven by the number of access providers that have their own transport assets into your building. If there is only one, then you are at the mercy of the provider, if there are several then even a bit of negotiation can significantly reduce your cost for service.
However, right now, there is a robust market of multiple providers that exist virtually everywhere. This is the wireless marketplace. Only a few years ago, with the best wireless Internet service limited to around 1Mbps download and several hundred Kbits per second, these services were good for road warriors, but not as a replacement for wired services (or WiFi connected to a wired service). The situation changed a bit with 3G services, and now even more with multiple 4G service providers available and more on the way. This means that there are multiple service providers banging into your mobile devices that can provide multi-Mbps enabling a whole range of applications.
The wireless companies want to lock us in to contracts, or at least monthly plans, at a fixed cost and fixed maximum use (without paying an additional cost). However, at any moment, unlike the wired situation, you are surrounded by multiple wireless providers, each providing essentially the same commodity services. But with a contract or device limited to a single provider, it is not possible to take advantage of this rich access environment.
This situation will change. With embedded 3G and 4G multi-band capabilities built into portable devices (e.g., laptops, tablets, phone, etc.) and new market could emerge that puts the power of the moment and choice in the hands of the user. Like Priceline, a user would advertise the fact that Internet service is needed and either set a price or let a real-time market set the price. Competition among the several carriers will most likely drive the price down, providing the best value to the consumer. This type of service could be implemented via a subscription service that will handle the auction, and then enable the programming of the wireless device to use the selected service. Options would then exist for improving the current pricing schemes of monthly data transfer caps. For example, it may be possible to pool multiple accounts, by using a central administration and allocation mechanism that dynamically assigns an account with ample unused data transfer available to a requesting mobile device.
So, when will this happen? With applications demanding more and more bandwidth, the flexibility of our mobile devices increasing, and the volume production of flexible wireless hardware, one or two things will happen, each to the benefit of consumers and business users alike:
- One of the several 4G wireless providers will decide to break with the pack and introduce higher data caps or even a plan with no cap at all
- An enterprising company will develop an approach to enable reverse auctions or bandwidth pooling
Maybe both will happen, or not, but the precedent has been set in other areas of business including:
- Least cost routing for voice call termination
- Reverse auction hotel costs and airline fares
- Credit cards that offer travel points on any airline
New business models are starting all the time, maybe this is one that is about to get some wireless legs.
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