Vodafone recently launched a truly unlimited all you can eat mobile plan. No capped speeds. Very few catches. As much data as you want. There's just one problem. For most, it's an irrational purchase.
Vodafone's unlimited plan could however also represent the future of the industry. Telcos want to increase (or at least maintain) revenue per customer, but even entry-level plans have a tonne of data. More than we’re using. You need to charge for something else. Speed, for example.
This could be the start of mobile plans looking a lot more like the NBN, but that might not be a good thing. You could end up paying more just to get the same kind of mobile service you already have.
Earlier this year, the ACCC released new statistics on internet usage in Australia. In December last year, the average Aussie was only using 24.4GB of data per month. That was a 23% increase on numbers from 2019. If we're generous and assume a further 23% growth, that comes to 30GB.
Even when you just look at Vodafone's plan range, the entry-level option includes 40GB of data for $40 per month. You can get 80GB for $5 per month more. Sure, some could benefit from a truly endless amount of data, but at $85 per month, it simply doesn't make sense.
Data allowances are starting to lose relevance. Unless you opt for a super cheap plan or are a very heavy user, you probably don't have to worry about monitoring your data usage.
Data allowances have grown faster than usage.
This fundamentally represents a problem for telcos. How do you move someone to a more expensive plan when the industry has been in a race to the bottom? How do you pump those numbers? Building 5G networks is expensive, there’s existing network maintenance to consider, and you’ve gotta keep the shareholders happy.
The solution could be flipping the script. Instead of charging customers for data, charge them for speed. In the same way most NBN plans have unlimited data - all you have to do is pick your provider and speed tier - we could be looking at a future where that's also how you a mobile plan.
This kind of plan structure is common in Northern Europe. Finnish telco Elisa, for example, has a 10Mbps plan for €26.90 per month ($43), a 300Mbps plan for €31.90 per month ($51), and a 1Gbps plan for €49.90 per month ($80). All of these plans have unlimited data.
It's hard to imagine the entire industry suddenly shifting to this structure, but it's kinda already happening within the Vodafone family. MVNO felix has an unlimited plan capped to 20Mbps for $35 per month. If you want to uncap those speeds, you'll pay $85 per month on Vodafone.
Vodafone even has different speeds of "endless data" for when you go over your primary data allowance, depending on how much you pay. Burn through your allowance on Vodafone's cheapest plan? You'll be stuck at 2Mbps. If you're on a pricier option (but not the proper unlimited plan) you'll get a more generous 10Mbps. The framework is there. As soon as 5G is ubiquitous enough to offer genuine speed differentiation, it's easy to see telcos flicking the switch.
After all, both Optus and Vodafone offer two tiers of 5G home internet plan - one capped to 100Mbps, one uncapped - so why not on 5G mobile plans?
Moving to a speed cap structure for phone plans would have its challenges. For many, it could represent a worse deal. If you're already paying for as much data as you need at uncapped speeds, getting slung with a higher bill just to keep getting the kind of performance you're already getting would feel pretty awful. If you’re getting 40GB at full 5G speeds for $40 per month, paying $40 per month for an unlimited plan capped to 20Mbps could feel like a downgrade. Especially if you never go over your allowance.
Capped mobile plans are also inefficient and could create extra congestion. Mobile spectrum is a limited resource, and a phone actively engaging with the network at a slower speed naturally needs to maintain that connection for longer than a device with an uncapped connection. Despite transmitting at slower speeds, it still needs the same amount of spectrum as a device accessing at uncapped speeds.
Lastly, capped speeds could make buying a phone plan more confusing. The ACCC would carefully look at the speed claims made by telcos, the same way it does for NBN providers. Telcos would almost certainly be obliged to not only provide plan maximums, but the typical speeds you can expect to get during congested hours.
Of course, there could also be an upshot. If every mobile plan is unlimited, app developers would have a lot more freedom to build apps that can genuinely utilise all you can eat data.
Even in the short term, this could make niche data heavy experiences - like Xbox Cloud Game Streaming - more mainstream, especially on the go. Xbox Cloud Game Streaming requires 3GB of data per hour, which is 12 times more than streaming Netflix on your phone. It’s one of the few online mobile activities that could genuinely lead to burning through your data allowance faster than you expected.
It’s clear that for many, mobile data allowances are bigger than they need to be. It’s also clear that telcos want your money. As much of it as they can get. If a telco can’t upsell you with a larger data allowance, it will eventually look for new alternatives. Charging for speed instead of data seems the simplest solution, it’s just a shame that telcos stand to benefit from it more than consumers.
Alex Choros
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