The recent announcement that O2 will be introducing a cap on mobile data usage is the latest in a series of moves that could prove to be a step back for the growing mobile video ad market.
In response to the strain being placed on the mobile networks by the rapid uptake of data hungry smartphones, O2 have said that they will introduce a cap of 500MB of data usage on their least expensive tariffs. Currently O2 Smartphone owners benefit from unlimited data usage. Vodafone & Orange also have caps in place between 750MB-1GB for iPhone users. While for the vast majority of Smartphone owners these limits will be more than adequate, most of the population don't have clue how much data they are using. O2 have said they will alert users when they are approaching their data limit but the mere fact that people are aware that a cap exists will likely cause them to change their behaviours. Expect users to be far more cautious about accessing mobile video over their phone network and as such the market for pre-roll ads on mobile video could suffer from a reduction in eyeballs.
Perhaps it is unreasonable to expect that the network operators did nothing in response to the surge in data usage usage while their revenues remained flat. Just one streamed YouTube video has the same effect on a network as half a million text messages sent simultaneously. However in this case it seems they are guilty of taking something away from the many because of the actions of a few. Nearly a third of O2's data traffic is accounted for by just 0.1% of their customer base. O2 seemingly decided not to upset this group and potentially lose them to rival networks opting instead to clamp down across the board. Despite O2 stating that their policy will provide clarity - the problem comes when each of the different operators attack the same issue in a different way. O2 will charge a bolt on fee of £5 once data usage exceeds the cap giving the user another 500MB. Other networks could charge on a rolling basis per MB leading to confusion in the market.
According to O2's website here is what 500MB will get you;
Send 500,000 emails, without attachments,
or send 1,000 emails, with photos attached,
or visit 5,000 simple sites, like Twitter or your favourite blog,
or visit 1,500 rich content sites, like bbc.co.uk, guardian.co.uk or yahoo.co.uk,
or download 50 (low quality) or 12 (high quality) music tracks,
or watch 60 YouTube videos, about 4.5 minutes long,
Already I'd take issue that this will provide "clarity". Do the general public know know if an iTunes music download is high or low quality? And are they talking about the mobile versions of the bbc.co.uk or Guardian.co.uk, or the desktop sites which will use different amounts of data.
It's an interesting debate, and in an ideal world data would be unlimited. However, it can clog the network, is expensive to the carriers and a less data intense network in the short term might be a good thing.
However, I can see your argument that people will ease back on the data they consume in fear of excess charges - the exact thing unlimited data was introduced to alleviate. How much this will actually happen remains to be seen.
In future I can see packages being made up of more data and less minutes and text - again, a confusing place to be, but at least customers can decide what works for them.
Personally, as an O2 iPhone customer, I'll continue to munch data as much as I need it and see what the consequences are!
I can't help but feel customers would benefit from the removal of the word 'unlimited' when it comes to understanding data packages. I appreciate that this is part of a long standing sales approach, but in this recession driven economy surely there's a huge reward in developing a more open and indeed straightforward approach with your customers?
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