Unlimited data plans – threat or opportunity?

5G has been in the headlines for a while now, but a more dramatic news that is effective already now is the recent change in unlimited data plans in the UK. All major providers now offer decently priced unlimited plans. Well, for us Finns, this is old news, as we’ve had that for ages already, pretty much always.

One might wonder how will that affect consumers and the cellular networks in the UK?

Well, let’s compare British and Finnish mobile users. I’m lucky to have access to the Netradar data base for global network quality and usage data. Netradar is a recent start-up from Aalto University, and with our technology, we can get very detailed insights to consumers’ daily experience of mobile data connectivity, quality and usage of various connectivity technologies, like 3G, 4G, 5G and WIFI.

In general, in Finland people do not really look for WIFI hot spots or use some WIFI locator apps. There is no need, we have unlimited data and relatively good mobile networks. WIFI is used mainly at homes and offices, and even then, often because the devices happen to favour WIFI over cellular due to automatic settings – not that consumers really actively want WIFI in the first place. In the UK, and around the world, the situation is different.

Let’ start with looking at monthly data volumes.

Finnish smart phone users in H1/2019 averaged at 19GB/month of data over cellular networks. WIFI usage was much lower, half of that, on average 9.7GB/month.

In the UK, the average cellular data usage was 2.4GB but WIFI was five times higher, at around 12.9GB.

Yet, note that these are averages. And in particular in Finland, the distribution of monthly data usage over cellular has a very long tail; some users can consume hundreds of GB per month (even a terabyte), while others use less than a GB.

The median values are very interesting. Mobile operators often advocate averages in data consumption, but if we look at medians, the story changes dramatically.

In Finland, the median for data usage on smart phones over cellular per month is around 6GB, so less than 1/3 of the average. This tells that most consumers are rather conservative with their mobile devices and use of mobile apps and services; half of the consumers use 200MB/day or less. Considering how data hungry many apps and services are today, this consumption is not huge.

The downside with decently priced mobile data is that some consumers spend network resources a lot for the same price. The top 10% of Finnish consumers create more than half of the cellular smart phone traffic. Furthermore, as many people have 4G routers in their homes as the primary fixed access point, a small fraction of the consumers create by far most of the load in cellular networks.

For the UK, the median value for mobile data usage over cellular was only 0.5GB. A major reason is the pricing that is now changing.

WIFI median data usage for Finns is around 5.2GB and for British consumers 7.2GB per month.

We see differences in these two countries in numerous ways, but in terms of application usage, the differences can also be seen, e.g., in unconstrained speeds per app, and apps actually used by the consumers over cellular data connections. With Netradar, we can distinguish speeds where the network was not a limiting factor, so apps got all the bit rate they needed (unconstrained) from situations when the network had issues. Most often apps on mobile devices do not need much bit rate. Finns use apps that on average need some 8.5 Mbps from cellular networks, while British consumers are satisfied with 7 Mbps.

Finnish consumers use more often streaming apps than British consumers. Youtube is the most popular streaming service, followed by local broadcasting company apps, like Yle Areena in Finland, and BBC iPlayer in the UK. British consumers defer watching videos to WIFI networks, while Finnish consumers watch them pretty much anywhere at any time.

So, in summary, many people in the UK will surely change to unlimited data plans and start using mobile cellular data much more than before, and slowly forget to switch to WIFI for watching Youtube. Yet, many consumers will change their subscription (either from their own initiative or after a proposal by a salesman), but still remain light users. Some will start sharing their cellular subscription over WIFI to other home devices, like TVs, computers, and tablets.

In Finland, the load on the mobile networks is heavy and the Service Level Score (SLS) as defined by Netradar (i.e., the probability to get the bit rate you need from the network) is amongst the worst in Europe. I would expect the load on the British mobile networks to increase heavily over time, leading to more congestion. Hopefully the increased ARPU will lead to network investments, and forthcoming 5G deployments will ease the congestion and offer more capacity – us consumers, we don’t really need that high momentary speeds, but a 10 Mbps wireless connection nationwide would be a dream come true, some day.

Pricing can also affect the move to unlimited data plans but based on my own short survey of SIM pricing in Finland and UK, the price range is roughly similar. The interesting finding is though that UK mobile providers have more speed options to offer while Finnish providers seem to favor high theoretical speeds in their product descriptions – yet, as shown above, on a personal level for daily smart phone use, high top speeds are not really needed but ability to get even decent speeds more often would be welcome.

Which country and operators will follow this data plan trend next?

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