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Is it time for mobile carriers to scrap unlimited plans and bring back caps?

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Pricing has a major impact on mobile data usage, and when marginal bits are free – as with unlimited plans – traffic jumps significantly. That’s the conclusion of a study by NPD Group, a market research firm that covers a number of industries, including telecommunications.

Subscribers with unlimited plans use 67% more mobile data than subs who have caps. Interestingly, though, people with capped plans consume 8% more data overall, when WiFi offloading is factored in. The press release about the study doesn’t offer much detail – presumably, that’s what you’d get in a paid report – but it does offer one interesting data point: more and more data, particularly video, is streaming through smartphones, one way or the other…

The average U.S. smartphone user consumes a total of 31.4 GB of data on a monthly basis (including Wi-Fi and cellular consumption). This is up 25 percent from one year prior, when the total monthly data consumption averaged 25.2 GB per user…

Streaming video remains the number one driver of cellular and Wi-Fi data consumption on mobile and fixed networks, accounting for 83 percent of the total data used by smartphone owners. In Q3 2017, 67 percent of all smartphone users reported accessing video content via an app at least once a month, up from 57 percent in Q2 2017.

For the sake of playing around with numbers, take Ericsson’s estimate that the average North American smartphone currently consumes 7 GB of data a month and egregiously assume that there’s a 50/50 split between unlimited and capped plans in the market. In very round numbers, that implies that people with capped plans use about 5 GB a month and those with unlimited plans burn through 9 GB a month.

Whether those are the actual numbers or not, it’s an illustration of the dilemma facing mobile carriers. Do they stick with unlimited plans and hope that they can increase base rates quickly enough to pay for added capacity to meet demand – Ericsson predicts average North American consumption will be 48 GB by 2023 – or try to limit it with usage based pricing and reduce the need for capital spending on network expansion?