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Saturday, January 05, 2013

Musing: exploiting under-used network capacity or plan quotas

One of the things I like about technology in general, and the Internet and increasingly mobile apps in particular, is the ability to find value in stuff that otherwise gets wasted.

Companies like AirBnB and assorted clones allow people to rent out their homes easily, when they're away.

WhipCar allows you to rent out your car when it's not being used.

eBay and Freecycle allow people to sell or donate unwanted goods.

OptionTown.com allows airlines to exploit unused "assets" like empty seats on flights (pay a small fee to get the empty seat next to you, or buy an option for an upgrade).

There are many more examples in a similar vein, sometimes aimed at helping business get incremental revenue to improve return on capital, and sometimes aimed at consumers to monetise their time or personal possessions. The latter can have an impact on suppliers, either by creating a more efficient second-hand market (and thus slowing "new" sales) or introducing alternatives and reducing achievable prices (eg hotel vs. home-rental).

But we're still not seeing the equivalents emerge in telecoms. Various companies have proposed ways to exploit quiet, uncongested networks, by distributing bulk data overnight, for example. To be fair, some telcos do dynamic pricing to encourage users to time-shift (or place-shift) their usage, but it's still all a bit clunky and rarely communicated or sold to users in an effective way.

And the other bucket of "value" is from the end-user perspective. Postpaid users - and increasingly prepaid accounts too - get offered large quotas of minutes, SMS's and data, much of which goes to waste. I'm surprised we haven't worked out ways to "scavenge" value from this somehow. I've often used the concept of "social tethering" to stir debate ("share up to 200MB a month with my Facebook friends when they're in WiFi range"), but not much has happened there either.

Given economic pressures on both telcos and consumers, one or both of these sources of efficiency will undoubtedly be tapped sooner or later. In my view, network operators need to push harder with exploiting their own under-utilised assets, as otherwise they will get caught out when end-users start their own secondary markets in unused minutes and MB.

3 comments:

Davide said...

"In my view, network operators need to push harder with exploiting their own under-utilised assets, as otherwise they will get caught out when end-users start their own secondary markets in unused minutes and MB."

Do you believe end-users are in a position to share their unused minutes and MB with others? How?

Dean Bubley said...

Hi Davide

The point of my post was that numerous methods to exploit "unused assets" are emerging everywhere.

I would expect telecom to be no different - it would amaze me if nobody was working on services or applications to generate value from unused quotas, especially given the range of smartphones and the ability to use WiFi as an arbitrage/signalling channel.

The tethering example is one such idea - let's say you get 1GB data per month, but on average only use 600MB. You could get a clever tethering app which shared up to 200MB with friends if nearby.

Similarly, if an app is aware that you get 600mins/month and you're in the last week of the cycle and you have 500mins left, I'm sure you could come up with something clever to use it. I can think of a few straight away.

Telcos are playing with fire assuming that users will only ever consume a fraction of what they are allocated - that might change overnight with the right app.

(There are other implications too - accountants at telcos define revenue allocation based on quota size, not actual usage against quota. Shifts like this might radically change profitability of services if costs are variable but revenues are fixed)

Dean

Tom Uhart said...

This is the idea behind FON ('BT wifi' in the UK)