4G plans are changing telcos' game
Extra charges - as more users exceed mobile data plans - add to their coffers
Published on Aug 18, 2014 5:50 AM
More people are upgrading to 4G plans and busting their mobile data limits, putting an extra penny in telcos' pockets.
SingTel, StarHub and M1 recently reported that between 54 per cent and 58 per cent of all their postpaid mobile subscribers are on tiered data plans, most of which are 4G ones.
These plans come with data usage capped at as low as 100MB, depending on price tiers.
These replaced the generous 3G plans, all of which came with a much higher 12GB cap, but which have not been on sale since September 2012.
Telcos realised they could no longer keep up with rising mobile data traffic if they did not charge people based on usage.
To convince customers to switch to tiered data plans, telcos dangled handsome 4G handset subsidies and the promise of faster surfing on new 4G networks.
Many consumers bought into it, leading to the current situation: a growing proportion of tiered data users busting their data limits.
Today, between 18 and 20 per cent of all tiered data users - as opposed to about 10 per cent early last year - are paying more for exceeding their bundles.
This works out to 500,000 people across the three telcos paying extra every month.
As a double whammy, all telcos have nearly doubled the rates for excess mobile data use since January.
SingTel and M1 charge $10.70 for each extra gigabyte (GB), capped at $188 a month, while StarHub charges $8.56 per GB, capped at $85.60 a month.
Analysts say that many consumers are busting their monthly caps as they have yet to change their habits.
Nomura Securities managing director Sachin Gupta said: "Have a look on trains and buses: People are glued to their handheld screens for their Korean drama or YouTube fix."
While there are smartphone apps that help people track their data consumption, most are not using such apps. Singapore analyst Clement Teo at United States-based market research firm Forrester said that keeping tabs like this "is not natural behaviour".
Meanwhile, the faster 4G network is letting people download more data, making it harder not to use more of their allowance.
The next step for some users is to upgrade to pricier plans with higher data allowances.
One person who has done that is engineer John Wong. After busting his 3GB limit by 5GB earlier this year, he upgraded his data bundle to 7GB the next month.
"I'm trying to use public Wi-Fi as much as possible to stay below my current limit," said Mr Wong, 36.
Maybank Kim Eng analyst Gregory Yap expects such upgrades will become more commonplace - an outcome that telcos are also expecting.
But while telcos seem to have the winning formula at present, there is still a large group of people on the older 12GB 3G plans. As long as they do not renew their contracts for handset subsidies, they can keep their old plans.
All eyes are now on next month's launch of the new iPhone.
The last bastion of users on 12GB data plans may be willing to trade them in for a handset subsidy, changing the market forever.
It could be a watershed moment.