Home Blog 2018 Will Consumers Pay a Premium to Access High-Speed or Non-Compressed Mobile Content?

The NPD Group Blog

Insights and Opinions From Analysts and Experts in More Than 20 Industries

Speed and Compression-Based Data Tariffs – Will Consumers Bite?

Jan 18, 2018
Brad Akyuz, Director ;
Consumer Electronics , Commercial Technology , Connected Intelligence

Commoditization of Cellular Data has been a major theme discussed throughout the year as unlimited data plans have become the de facto offering in the U.S. mobile market. We have seen the same commoditization trend with voice and SMS in the past two decades, as mobile carriers first sold voice minutes and SMS in various size packages, but they were eventually thrown in for free when we started paying by the size of our cellular data bucket.

In the past year, every postpaid and prepaid carrier has jumped on the unlimited bandwagon, and even though more than half of the market is still on bucket plans, the unlimited data plan adoption keeps going up thanks to falling service prices. This is a troublesome scenario for mobile carriers, because cellular data is the main source of network monetization and offering unlimited data at discounted rates could result in continuously declining service revenues. Luckily, carriers seem to find an answer to this problem, and 2018 will show if this strategy has legs or not.

In essence, mobile carriers have taken a page out of cable operators’ playbook and are modifying their service plans based on data speeds, necessary for a no-buffer streaming service, or compression, which impacts image resolution. Every carrier now offers tiered unlimited data, where consumers opting to pay a premium enjoy benefits such as high-resolution video streaming, larger throttle limits, and smartphone tethering. AT&T (and its prepaid arm Cricket) even offers tiers based on download speeds, just like cable operators’ broadband internet pricing schemes.

With over two-thirds* of smartphone users regularly streaming video on their devices, 80+ percent* of the data traffic (cellular and Wi-Fi combined) is generated by video apps. Furthermore, we are seeing a massive uptick in demand for phones boasting large displays (nearly half of the smartphones sold in the U.S. market in 2017 had a screen size of 5.5” and larger) and as the screen size increases, streaming/viewing quality will be adversely impacted when data is compressed. With entertainment (TV and video) becoming the centerpiece of mobile push, we expect carriers to heavily market the benefits of access to high-speed or non-compressed (1080p+) resolution available on premium unlimited data plans in 2018.

 

*Source – NPD Connected Intelligence SmartMeter – Q3 2017


Related Blog Posts


June 19, 2018

Mobile Payments, Not Rocket Science

NPD Connected Intelligence President, Eddie Hold, explains what makes mobile payments much simpler in other countries and speculates why the U.S. has been slower to adopt mobile payment solutions.

May 29, 2018

Innovation Management – Whacking Piñatas

According to NPD’s U.S. B2B Software and Cloud Tracking Service, one of the fastest growing markets of software is the content and collaboration market. NPD’s Mike Diamond explores how innovation and the need for information management is driving this growth.

May 22, 2018

The Future of Cloud – The Ultimate Trojan Horse

Mike Diamond, Director, Industry Analysis, B2B Technology for The NPD Group, discusses the opportunities that cloud has created for channel partners.

May 10, 2018

Not The Same As It Ever Was

Mike Diamond, Director, Industry Analysis, B2B Technology for The NPD Group, breaks down some of the factors contributing to growth in the B2B information security market.

Newsletter

Subscribe and get key market trends and insights relevant to your industry each month.

We will not sell your information. View privacy notice.

Follow Us

© The NPD Group, Inc.