To develop the Business Case for Mobile Operator use of Wi-Fi, we are expanding this paper to include the perspectives of leading Mobile Operators, as a task within the WBA.

Other Operators are planning to offer this. Look for it! Thus far, Sprint, MetroPCS and T-Mobile offer this feature.

As mobile service becomes the replacement for wireline service, it is picking up all of the best features of wireline. Next up, High-Quality Voice!

With Operators looking for ways to reduce their cost/bit and to serve the growing data capacity demands, Wi-Fi is a potentially attractive solution … if only it can be made simple (as Hotspot 2.0 offers). Smartphones, laptops and tablets are all likely candidates to benefit from increasing offload of data to Wi-Fi.

For more details, check out the excellent Cisco White Paper, “The Future of Hotspots” (they led the Hotspot 2.0 Task Force).

The days of voice plans are ending. The menu of services will change to reflect changing customer demands.

How will this change how Customers purchase mobile services?

Choice of Service Plan(s), Choice of Quantity

For each service, Customers can choose whether they wish to purchase a bulk package (e.g., of Voice minutes, Text messages, MB of Internet use, or Content consumed) or pay for it per incremental use.  This represents a significant change from the current service menu: as Customers’ appetites change, so does the service menu.

No Mandatory Components

For example, although operators may wish to mandate that all subscribers purchase large buckets of voice minutes, Operators will be forced to abandon this requirement. Customer freedom of choice of Service plan and choice of Quantity will enable several, new choices. Many Customers (that prefer text of Data services) will not wish to subscribe to a monthly Voice plan with 500 voice minutes/month. For example, some Customers may wish to purchase only an unlimited Text message service (no Voice and no Internet data service). Other customers may wish to subscribe to a monthly plan for a large bucket of data, and choose to “Pay as you Go” for any text messages or voice calls that they use.

Evolution of Prepaid to “Pay as you Go”

Many new customers will wish to avoid monthly contracts altogether, and purchase these services on a Prepaid basis, paying incrementally per use. These “Pay as you Go” service options represent an evolution of the Prepaid service plans of today, updated to allow flexible purchase of any mixture of Voice/Text/Data/Content from their account balance.

Payment:  Choose one:
( ) Postpaid (monthly plan)
( ) Prepaid

Voice Choose one:
( ) No bucket voice minutes, “Pay as you Go”
( ) Small bucket of minutes
( ) Large bucket of minutes

Text Choose one:
( ) No bucket of text messages, “Pay as you Go”
( ) Small bucket of text messages
( ) Large bucket of text messages

Data Choose one:
( ) No bucket of data use, “Pay as you Go”
( ) Small bucket of data use
( ) Large bucket of data use

Customers wish to purchase what they need. As Customers’ appetite and need for services changes from Voice to Text and Data (see “Voice being replaced by Text and Data“), the available service plans must change, too.

What needs to Change?

Operators offer many of these choices, but Prepaid users can not buy data plans. Why?!? Subscribers can purchase Voice & SMS and even Content from a pre-funded account, why not data, too? Since 80% of the world’s mobile subscribers are Prepaid, Operators will want and need to allow subscribers to purchase data services (on a “pay for incremental use” basis) on a Prepaid basis.

Pay per use Data is not yet available. Operators want to encourage subscribers to start to use data services, and this will be an important technique. Operators fear that since Subscribers do not have a good feel about how much data they are using, they may experience sticker shock. “If I browse the Internet for an hour, how much will it cost?” NTT DoCoMo has very successfully charged for incremental data use on a per-MB basis, but there are better ways to do this (such as flat fee per hour or per day). Pricing for data use needs to get simpler before subscribers are willing to jump in a use data on a “pay per use” basis.

Operators have successfully delivered “Pay as you go” plans for Voice and Text, so there is a good experience to build upon. Soon, Customers will be able to purchase as much or as little of each category: Voice, Text, Data, and Content.

Update: Mobile Operators offer Internet to PrePaid users

As I forecast (above), mobile operators are bringing Mobile Internet service to PrePaid users, filling a big gap in the available pricing plans. T-Mobile USA announced that they are adding PrePaid data plans that can be PrePaid [as reported by Maisie Ramsay in Wireless Week, 14 October 2010]. “The carrier said it will begin offering two data options for customers starting at 200 MB per month for $10 on postpaid plans and $15 per month on those going without a contract. The plans follow recent tiered packages launched by AT&T Mobility and plans by Verizon Wireless to announce a similar offering in the coming weeks.” RCR Wireless reported. Previously, in the U.S., AT&T Mobility offered a lower-cost PostPaid plan, but this was an incremental change and still required that the user commit to a contract. In contrast, T-Mobile’s plan serves the currently unserved PrePaid market segment. As a trend, PrePaid data plans represent a huge expansion of the potential number of Mobile Internet users, since 75% of mobile subscribers (globally) are PrePaid subscribers.

AT&T Mobility’s move to create a lower-cost plan for mobile data was smart (as reported by my friend, Sue Rudd). Nice move, considering that they are expanding their iPhone base in the U.S. before they lost their iPhone exclusive. However, the T-Mobile move is far more important and represents a fundamental change to deliver the same services to both PostPaid and PrePaid (contract) subscribers.

The future for Mobile Operators is in data services, and now Operators are moving to serve the dominant way that subscribers prefer to pay: PrePaid.

Update: More PrePaid data offerings

Sue Rudd of Strategy Analytics pointed out that there are some additional PrePaid data offerings around the world, especially in Europe (where PrePaid subscribers are treated very differently than in the U.S.). She pointed to some offerings from Wind (3G Italy) , Virgin (MVNO, USA), and several WiMAX offerings such as Clearwire (WiMAX, USA). Clearwire represents one of a growing set of “Semi-Prepaid” plans offering Daily and Weekly contracts for Mobile Broadband that have been available since mod-2010.

Text replaces Voice for Teens

Voice: -25%
Text: +566%
Data: +300%

The type of communication is fundamentally changing. Younger consumers increasingly replace a real-time interaction (e.g., conversation) with an asynchronous interaction (text/IM/e-mail). SInce these interactions can be performed whenever they want, they feel that this type of communication is less intrusive (reflect their preference to have shorter interactions at a time of their choosing). This style of communication also fits our growing tendency to multi-task and avoid extended focus on a single topic.

The future of cell phone plans will de-emphasize voice and focus on data, offering a “cafeteria plan” of choice that does not revolve around a core, voice plan. This might seem obvious to many smartphone users (who spend most of their time using applications over a data connection) and Operators (that see that as much as 90% of the network traffic being used by data, not voice). But this change will turn current service plans on their head.

As iPhone users are all too aware, their purchase starts with a voice plan that most will not fully use. AT&T forces iPhone subscribers to purchase a costly voice plan that most subscribers do not want or need. (In the U.S., the minimum AT&T plan is 450 minutes of voice at $45, although a large percentage of users may use only a small fraction of this purchase, and many do not need this plan at all). Forcing users to purchase a large “bucket” of minutes is old school – useful for a generation of business users that transact by phone calls, but increasing irrelevant to young subscribers that prefer SMS and Skype. You can’t force subscribers to pay for something that they do not need.

Subscribers want a menu, and will purchase what they need

AT&T (and other operators) may find it profitable to force their subscribers to pay for something that they do not need, but over time they will be forced to let subscribers purchase what they need. This will require the Operators to offer a more flexible service plan, resembling purchases from a cafeteria. Subscribers want to be able to select the amount of voice/SMS/data that they will consume. Additionally, they want to be able to pay for this either on a (a) pre-paid or (b) post-paid (monthly) basis. Neither of these options are available today, but they will be, over time.

Wireless + Wireline (Interim Step)

If the administration prefers to keep the desk phone (for regulatory or policy reasons, to track corporate communications), then the wireless device can work as a wireless extension of the desktop phone (see the example of BlackBerry Mobile Voice System). This is a lot more complicated to maintain: more gear added to allow the mobile phone to act as an extension of the office PBX, and more maintenance of that gear. This solution is only desirable for those that must keep the wireline phone.

Wireless-only

Maximum savings of $1,000/year occur when the wireline or IP phone is eliminated. This solution is simple and easy to implement, as it does not add gear, it eliminates it. Eventually, the entire wireline solution will be eliminated, leaving the office with a wireless-only solution. This solution can be implemented using either (a) existing Wi-Fi or (b) a dedicated, in-building femtocell. Read on for a comparison of these two options and existing examples of these solutions, which concludes that UMA over Wi-Fi is best today, but Femtocells will eventually be the best solution.

UMA is the buzzword: enables Voice connections (transparent to the User) using available Wi-Fi connections. UMA is a piece of software that is built into the phone. It is a lot easier to use than a separate Voice over IP apps that must be installed and configured by the user, and that requires the user to have a IP data plan.

BlackBerry already has UMA  across their model line, and Android may offer it (there are rumors that this is being tested; see petition requesting it). Apple iPhone has Wi-Fi but does not yet include UMA, but it could easily (perhaps we’ll see it in a future release).

UMA can deliver significant savings of $500/year or more, by eliminating a landline phone and allowing the user to solely use their mobile phone. It’s the equivalent of replacing your landline phone by solely using your cellphone (than can also save you up to $1,000/year, surprisingly), but the Operator typically encourages this and includes it at little/no cost! You get free voice in the Home/Office! One can save a lot on International Roaming and Long Distance charges, too, since UMA calls are routed over Wi-Fi back to the Home network, and appear (and are billed) as local calls–as if you were calling from your home/office. In actual use, we found that “Road warriors” could save up to $1,000/month by using a UMA device (such as a BlackBerry) to make calls over Wi-Fi while traveling.

Read on to see how UMA is one of many solutions towards eliminating wireline, in End Game: Wireline Eliminated.

Rumors are circulating that T-Mobile is about to discontinue their @Home service (although I have been unable to confirm this officially). Although these rumors refer to a statement made on January 7th by a T-Mobile rep, there is no official mention of it on the T-Mobile web site. Strange.  Even the purported T-Mobile statement is vague, and gives no clear reason for the change.

If true, then my interpretation is that T-Mobile is focusing less on the interim step (supporting wireline use with a VoIP product delivering small profit) and is focusing more on the destination, mobile-only use (and wireline replacement). This is consistent with the original rumor that referenced COO dislike for its lack of profitability, reported by Boy Genius in December.

This would remove an attractive alternative for some consumers that are cutting the cord, but prefer to still maintain wireline (and cordless) devices in their home. For those that are interested in eliminating their telephone and Long Distance bills, please check out the menu of options that I just reviewed.

Here are links to the rumors (and I would welcome definitive news of this, if it exists):

- RUMORS – RUMORS- RUMORS – RUMORS- RUMORS – RUMORS- RUMORS – RUMORS -

T-Mobile shuts down @Home landline replacement service
January 8, 2010 — 7:49am ET | By Sean Buckley

“T-Mobile was so confident that its @Home landline replacement service would be such a draw for consumers that when it introduced the service in July 2008 it had a commercial showing a woman cutting down phone lines with a chain saw. Cautioning consumers not to literally cut down lines, the @Home service tried to sell the idea that you could cut the phone company’s cord and get dirt cheap calling through your broadband line. But with so many new broadband VoIP options on the market, the @Home service never took off the way T-Mobile envisioned it and now it’s going to stop selling the service. T-Mobile will, however, support existing @Home customers.

The idea was simple enough. For $10 a month, a user could make unlimited local and long-distance calls by plugging a T-Mobile provided box into their respective cable or DSL broadband line. Although T-Mobile did not disclose why it’s cancelling the service, it’s likely that T-Mobile realized just as did Verizon when it canceled its Hub service last fall that its customers would just use their wireless phone instead of a new landline replacement service

- MORE RUMORS – MORE RUMORS- MORE RUMORS- MORE RUMORS- MORE RUMORS -

No One’s @Home: T-Mobile Axes Landline Replacement
01/07/2010

T-Mobile USA said Thursday it will no longer sell its @Home landline replacement service, although it will continue to support the customers already using it. The Deutsche Telekom-owned wireless service provider introduced T-Mobile@Home in July 2008; for $10 per month, the product – a box plugged into a broadband connection and landline phone – allowed subscribers to make unlimited local and long-distance calls. T-Mobile didn’t say why it’s yanking @Home, but rival Verizon Wireless last fall axed its similar offering, Hub, because customers relied on wireless services rather than the landline replacement option. It’s fair to speculate that T-Mobile’s users are following much the same patterns. T-Mobile emphasized the @Home decision does not impact the company’s Unlimited HotSpot Wi-Fi service.

- ORIGINAL RUMOR- ORIGINAL RUMOR- ORIGINAL RUMOR- ORIGINAL RUMOR-

T-Mobile to discontinue @Home service

by Kelly Hodgkins on January 7th, 2010

About a month ago, one of our tipsters hit us up to let us know that T-Mobile was probably in the process of shutting down their @Home service. The @Home service allowed T-Mobile customers to make home phone calls via a T-Mobile router connected to the internet. The @Home service was an available add-on to most wireless service plans offered by T-Mobile for a modest $10/month. Bad news for future @Home customers, though, because another circulating rumor confirms what we reported a month ago — T-Mobile has supposedly halted future investment in the @Home service. Current customers can continue to use the service and T-Mobile will continue to support it for the time being. Once the current inventory of @Home routers has been sold, T-Mobile will no longer offer this service to new customers, though. Any T-Mobile customers interested in jumping on board, should do so tout de suite.

Follow the flow chart and see which of the following options is best for you:

Several plans exist that allow you to get more for less: maintain the same telephone service (i.e., no changes in how you use the phone or the features that you expect to receive) at a fraction (15%) of the price. You can use these plans with assurance, as these plans work, are well-reviewed, widely-available, and are mature. These services have been serving customers for 5 years, so jump in the pool! The water is fine.

What you choose depends on your preferences:

• Fixed at home
  (“I prefer to use wireline and cordless phones when at home, and do not intend to use a mobile phone”)
• Fixed at home & mobile away from home
  (“I prefer to use wireline and cordless phones when at home instead of my mobile phone”)
• Mobile-only
  (“I prefer to make/receive all of my calls with my mobile phone”)

A) You prefer: Fixed at home

You just want to reduce your costs without having to change the way that you use the phone.

Your Choices: You can obtain Internet telephone service from Vonage (in the U.S.), your Cable company, and your local Telephone company, in order of increasing cost (and decreasing savings). Many folks that are considering this step will prefer to choose a trusted partner–the existing Telephone company. However comforting, obtaining a replacement service from the phone company will likely save you less. But check out the prices and see for yourself which price plans are best for you. Beware of “teaser” rates, such as $9.99/month (small print: only for the first X months, then increasing to a much higher monthly rate). This option is increasingly unattractive: since nearly everyone has a mobile phone, why not consider a choice that gives you all of these benefits as a bundle with your mobile service (next Option B)? For more information on this option, please see the excellent, recent article “Switch to Internet Calling” [Glenn Fleischman, MacWorld, October 2009]–an excerpt of his article is available online here.

Vonage, for example, offers a basic $18/month 500-minute plan. Please note that this is far inferior to the $10/month bundle that you can achieve with T-Mobile’s @Home service (described is the “Savings Example” above, and below under “Fixed at home and Mobile away”).

Note: You do not have to lose your phone number; you may keep your home phone number and “port” your number to your Internet phone (or to another service, such as Google Voice, that bridges your home phone number with one or more devices, including your mobile phone, office phone, etc.). To keep your phone number, be sure to request this when you sign up for service with your new carrier, as they will take responsibility to promptly and seamlessly make this change.

Advantages:
Average cost savings of $37/month (using FCC averages, your savings will depend on your current bill)

Disadvantages:
Obtaining telephone service from a cable/Internet company means that you are more likely to keep their service.
Potentially poorer customer service (harder to troubleshoot than keeping service from the Telco).

B) You prefer: Fixed at home & Mobile away from home

You want to keep your existing home phone number and devices (along with cordless phones and answering machines), but you also use a cell phone

Your Choices: Mobile phone companies are starting to offer this option: a bundle that replaces your wireline service, while allowing you to keep your home phone number and devices. T-Mobile offers an excellent choice (in the U.S.) that gives you every feature that you can imagine for $10/month … if you use their cellular service. That’s the catch: each of these service bundles replaces your telephone service. For more information on this option, please see the excellent, recent article “Save Cell Phone Minutes by Placing Calls over Broadband” [Glenn Fleischman, MacWorld, October 2009]–an excerpt of his article is available online here.

Note: You do not have to lose your phone number; you may keep your home phone number and “port” your number to your Internet phone , your cellular phone, or to another service, such as Google Voice, that bridges your home phone number with one or more devices, including your mobile phone. To keep your phone number, be sure to request this when you sign up for service with your new carrier, as they will take responsibility to promptly and seamlessly make this change.

Advantages:
Average cost savings of $45/month (using FCC averages, your savings will depend on your current bill)

Disadvantages:
Obtaining telephone service from a cellular company means that you are more likely to keep their service.
Potentially poorer customer service (harder to troubleshoot than keeping service from the Telco).

C) You prefer: Mobile-only

Your Choices: Mobile phone companies are starting to offer this option: an option that lets you reliably and inexpensively use your mobile phone in place of your home phone. You have options, so choose depending on your preferences:

C1: You prefer Mobile-only, and get great coverage at Home

Any mobile carrier will sell you service that includes ample minutes (allowing you to use the phone all that you want, including at home), but there are even better options (read on).

Advantages:
Average cost savings of $40/month (using FCC averages, your savings will depend on your current bill)
Choice of cellular company; if you do not like the coverage or service that you receive, you can readily change carriers.

Disadvantage:
You lose use of any cordless phones, answering machine, FAX devices in your home.

C2:  You prefer Mobile-only, and want better coverage at Home

Some mobile carriers will sell you service with an option for an in-home cell site. Really! You don’t have to be John McCain to get your own cell site (called a “femtocell”). Verizon Wireless and Sprint already offer this option, and AT&T will shortly. T-Mobile offers a different solution that lets their phones make high-quality calls over any Wi-Fi (in your home, or around the world), so it requires that you use a phone with UMA (Unlicensed Mobile Access) with Wi-Fi. For a more detailed comparison of the implementation costs, please see my review comparing the Sprint vs. T-Mobile solutions.

Advantages:
Average cost savings of $45/month (using FCC averages, your savings will depend on your current bill).
Choice of cellular company; if you do not like the coverage or service that you receive, you can readily change carriers.

Disadvantage:
You lose use of any cordless phones, answering machine, FAX devices in your home.
@Home service requires that you use a compatible (UMA) phone that makes calls over Wi-Fi, when possible.

C3: You prefer Mobile-only, and want unlimited, free calling at Home

Free, unlimited, at Home service

T-Mobile’s @Home service is a great deal (available in the U.S.) that gives you unlimited calling (including Long Distance calling to U.S. numbers), voice mail, three-way calling, caller ID (including Name) – a service bundle costing $50 or more from your Telco – for only $10/month. This is one smokin’ deal. (I use it in my Home Office each day).

Note: You do not have to lose your phone number; you may keep your home phone number and “port” your number to your cellular phone (or to another service, such as Google Voice, that bridges your home phone number with one or more devices, including your mobile phone). To keep your phone number, be sure to request this when you sign up for service with your new carrier, as they will take responsibility to promptly and seamlessly make this change. For more information on this option, please see the excellent, recent article “Save Cell Phone Minutes by Placing Calls over Broadband” [Glenn Fleischman, MacWorld, October 2009]–an excerpt of his article is available online here.

Advantages:
Average cost savings of $45/month (using FCC averages, your savings will depend on your current bill)
Choice of cellular company; if you do not like the coverage or service that you receive, you can readily change carriers.

Disadvantage:
You lose use of any cordless phones, answering machine, FAX devices in your home.
@Home service requires that you use a compatible (UMA) phone that makes calls over Wi-Fi, when possible.

Mobile-only is an increasingly compelling choice for nearly all consumers. Already, 25%of U.S. households have cut the cord in favor of mobile-only telephone service. For more info on this trend, see my earlier post on how and why consumers cut the cord.

P.S. This recommendation is written by a Bell Labs engineer who spent many of his early years designing and delivering the world’s best telephony service. So you can be assured that I do not make a recommendation to ditch it unless the options are clearly better. But technology moves on. In fact, AT&T recently asked the FCC “How long do we have to maintain the wireline network?” which effectively says that the wireline network is becoming obsolete and consumers will increasingly migrate away from fixed to mobile and Internet telephone service over the next few years.

Your Savings vs. Typical Savings

Your savings are best determined by your monthly bill—go grab one to determine what you are paying now and what you can actually save.

Typical Telephone charges of $43/month: The FCC reports that the average, residential telephone bill (in an urban center, in October 2007) is $43/month.

Typical Long Distance charges of $12/month: The FCC and other organizations report that the average Long Distance bill is approximately $12 (120 minutes x $0.06/minute), although this varies widely, depending on use.

Typical savings could be $540/year. A “typical” consumer would save less than I experience: an average bill is $55/month could be reduced to $10/month., yielding a savings of $45/month.