Simplifying Data Billing By Making It More Complex?
By Mike Masnick, Fri Oct 22 22:45:00 GMT 2004

An experiment offering free or subsidized data plans is called a success, but the details seem to contradict almost every point made by those who ran it. The real lessons, however, aren't so complex.

Taking a page from toll free calling systems around the world, a system was set up to offer toll free mobile data billing systems in a few European countries. The idea was to see what would happen when mobile Internet users could access sites for free, without having to worry about data charges. Right from the beginning, some contradictions come up in the description of the system. First, the project coordinator calls it a success in using the mobile Internet more, and then notes: "Mobile operators also benefit by increasing their revenue per user."

If users are getting access for free, then how are the operators making more money? The details are hidden a little further down in the piece, suggesting that the access could be subsidized by a third party -- for example, the site in question, or an advertiser. The operators still make money and the subscribers still get their free Internet access, but the site owners themselves pay for it. What's the incentive for the site owners? That's not discussed. Obviously, it could bring more mobile traffic, but site owners would first need to be convinced that the traffic will bring more in return than the fees, and that may be a very difficult sell -- especially since they have no control over how many people will visit the site.

From there, the disconnect between the actual results and what's said about them continue. In Israel, where many users already have flat-rate data access plans or very cheap per-byte fees, the toll-free access increased traffic a little bit at the beginning, but quickly went away. A movie ticket offering in Norway didn't see much of an increase in traffic. A shopping site in the UK found that offering free shipping had much better results than free access to its mobile web site. A Greek job center discovered not many people used the free access -- though, the project coordinator blames this on the poor quality of the site itself.

In fact, only one web site in the entire article, a stock trading site in Norway and Germany, appears to have seen a noticeable increase in traffic. It's hard to see how that's going to convince too many site owners to pay for their users' data traffic. Yet, the team behind the tests still calls it a success.

When asked about the biggest lesson learned from this toll-free experience, the project coordinator claims: "If the mobile Internet is to take off, operators must simplify their data billing." That makes sense -- but that's not what was done here. By adding yet another way to handle billing, where subscribers may not fully understand what's happening, it doesn't simplify things. It makes it more complex. Suddenly, some of their surfing time is "free" while other parts are paid per byte? That doesn't encourage usage, it encourages confusion.

If operators truly wanted to simplify data billing, they would go with flat-rate plans that actually encourage people to use data, rather than making them worry about how many bytes they're using up. While it's good to see creative attempts at simplifying billing and encouraging data usage, this particular plan ignores the real costs to those doing the subsidizing, and does little to really simplify the end-user experience.