Majority of Cell Phone Users Better Off with Tiered Pricing

July 1, 2010

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Before telecom carriers – namely AT&T – began moving away from the unlimited data pricing, it was easy to dismiss how much bandwidth cell phone users took up each month.

However with AT&T’s introduction of tiered pricing, Nielsen Co. decided to take a closer look at usage patterns and how they might be impacted by new pricing models.

Staggering Amounts

The company collects phone bills from more than 60,000 mobile customers every month, analyzing every line item on the bill. Examining year-over-year changes, Nielsen was struck by the large disparity of usage among smartphone users and the staggering amounts of data used by the heaviest users.

Average data consumption increased from about 90MB per month during the first quarter of 2009 to 298MB per month during the first quarter of 2010, it found.? This represents a year-over-year increase of approximately 230%.

While this increase is substantial, in the first quarter of 2009 more than a third of smart phone subscribers used less than 1MB of data per month; this number has dropped to a quarter in the first quarter of 2010 as the number of applications and the utility of smart devices has increased substantially.

Bottom line: about 20 million current smartphone users are hardly using data.

Other findings Nielsen made from its study:

  • The top 6 percent of smart phone users are consuming half of all data. The vast majority of customers, 99 percent according to the 60,000 phone bills that Nielsen collects and analyzes every month are better off with a pricing scheme like AT&T’s new data pricing model than under flat-rate pricing where they are paying for much more than they ever use.
  • A quarter of cell phone users are not using their device for data services at all.
  • More than a third of smartphone users have not yet signed up for a data plan. Nielsen believes that most of these smart phone users were among the first to get these devices, before operators required a data plan be added to the device subscription.
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