Monday, November 07, 2011

Rethinking cell phone plans

You are a smart phone user with unlimited data, text, and voice post-paid plan. However, you do not use your voice plan much. In fact, your voice plan usage has dropped so much that you will not even fully utilize the lowest tiered voice plan offered by your carrier. Your text usage is also dropping, thanks to applications such as Viber, Skype, and Blackberry messenger. Only your data usage is increasing. However, you are left wondering why do you still have to pay a heft sum for unlimited voice and text plans that you sparingly use?

Ok, ok, carriers (read AT&T and Verizon) do not offer unlimited data plans anymore, unless you were among those lucky customers who purchased smart phones from them a while back (or unless you are a Sprint customer). But wouldn't it be nice if you do not have to pay for voice and text plans per month that you sparingly use?

Sadly, there has been little innovation in cellular data, voice, and text plans which does not benefit the customer at all. The simplest pricing strategy is additive bundling. One must purchase a voice plan, before purchasing a data or text. And all of it from one carrier. Given the uptick in data usage, and given our phones are increasingly sophisticated computers, paying separately for data, voice, and text services, and forcing a user to purchase a voice plan before purchasing a data plan increasing does not make any sense. But what can be done?

Imagine the following plans.

Data only (post or prepaid)
Carriers only offer xG (where x stands for a 3 or 4) data plan, and provide their own free smart phone app for voice calling. This plan can be the cheapest option for users. Data service always works, so that parents can always text their kids. And kids do not pick the phone calls anyway from their parents. Voice calls may work, depending on the signal strength. Call it the teenager plan.

Data (post or prepaid) + voice calls (usage based)
Same as above with a prepaid voice plan. The carrier voice calling app dynamically shifts between xG data plan, WiFi, or a prepaid voice plan depending on the available signal and its strength. The user is only charged for the voice calls it makes. Call it the 35+ plan.

Data (post or prepaid) + voice plan (rollover or unlimited)
Same as above but with a rollover or unlimited voice plan. Call it the everything else, 20-35, or family talk plan.

Data (rollover) + voice plan (rollover)
Data and voice plans roll over from month to month.

Now imagine that you can purchase data + voice plans, but instead you can purchase data from one carrier and voice from another? Why is that useful? Imagine that when you want to upgrade your phone, both your data and voice carriers offer you a phone upgrade option. Wouldn't that be cool?

Such a plan can potentially become a traveler's best friend. For example, when you travel, why do you have to worry about purchasing a separate SIM card for phone and carrying two phones? Just purchase or add credit to a local voice plan app for your smart phone and bingo!

But where is this innovation going to come from? Do not expect to come it from carriers.

The person who may have been able to pull it off in the very near future -- Steve Jobs -- is now dead. Android is all about increasing its installed base, so it will be least likely to upset carriers. Windows phone is too young to force carriers to innovatively price their voice plans.

Some innovation may require regulatory intervention without which one may never be able to purchase a data plan from one carrier and voice plan from other.

Or, perhaps, the innovation in pricing may come from an underdog carrier. Who knows?