daniel hajj mwc ah

Wireless Carriers Across the Globe are Ditching Free Services and Unlimited Data

February 24, 2014 - Written By Jeremiah Nelson

It’s not just U.S. wireless carriers that are shifting away from unlimited data plans. Consumers are used to free services like Twitter and Facebook, too, but global wireless carriers want us to understand that we’ll have to pay up. Wireless networks aren’t cheap. “The idea that everything comes for free is a very strong notion, [however] this sense of this being free is wrong,” says Jon Fredrik Baksaas, CEO of Norwegian telecommunications company Telenor. “We have public transportation. We want it to be free, but it’s not. These investments will only happen if there is a plausible business model behind it.”

As wireless carriers move from 3G to 4G networks, they don’t want to make the same mistakes that they made when rolling out their older networks. Carriers want to capitalize on the increasing demand for mobile data and unlimited data plans don’t allow them to do that. Singtel’s CEO Sok Koong Chua said in a speech at MWC, “We need to be more disciplined. 4G is bringing so much more capacity to our networks. Let’s not repeat mistake of 3G.” Singtel operates wireless networks in Singapore, Thailand, India, Australia, and other countries. Consumers are sucking down more data but average revenue per user has actually decreased by about 2 percent per year. “The main problem we have as an industry is we have been unable to monetize this increased demand,” she said. “The industry we’re in has consistently underestimated data traffic growth.”

Wireless carriers are also concerned with building out their networks. That’s an expensive process and one that is never-ending. Carriers don’t just need more towers, they also need software and hardware upgrades for those towers. They also have to license spectrum from their governments in order to improve capacity. Telecomms want their governments to help with some of this, but it doesn’t always happen. “Without sufficient network investment, our economies will suffer and business investments will move to other countries,” Sok Koong Chua said. “Governments need to recognize this and encourage the necessary investments to be made.”

Other carriers are feeling the same way. America Movil CEO Daniel Hajj and Etisalat CEO Ahmad Abdulkarim Julfar are both concerned with their increasing capital expenditures. Data traffic has increased 15 times since 2008 on America Movil’s network. Abdulkarim Julfar says, “It will take $1 trillion of capex the next five years to meet the expected mobile growth” on Etisalat’s network, which operates in the United Arab Emirates.

It seems that wireless carriers around the world are feeling the squeeze. They also want to increase profits wherever they can. Data usage is the way that they are going to do it, and consumers are going to pay.